Perceived conditions, expectations and trend examples

[Richard Culle Noble]

Ms. Jennifer;

It seems to me that to intergrate the three ingriedents
expectations, perceptions, and trends that it would be helpful to know the
objective of then model you are building and the type of audience you are
designing it for. Are you, for example, interested in predicting the
amount of water the tourists need on a daily, weekly or annual basis or
perhaps trying to decide how much to take from the reservoir and when to
do it? I once designed a model defining the filtering process in the
communication process or translated Why didnt they hear what I really
said? The framework will help you sort the variables. Thank you.

Richard Noble
From: Richard Culle Noble <rnoble@unix1.sncc.lsu.edu>

[Jennifer Cover]

Hello SD Community,

Im looking for references that explain as well as give some typical examples to
perceived conditions, expectations and trend structures. I understand the differences
between these and why they are modeled separately (to capture delays and
distortions of information), but are there any references which build a "story" using
one integrated example?

Heres the context of this request:
Im doing a model of water supply and demand on Cyprus. Tourism is a big part
of summer demand there, so estimates of future water demand (and therefore
decisions for current water releases from the reservoir) are affected by water managers
perceptions of tourism development. This happens over both the short and longer
term, ie. water is released for the current tourist season according to whether or
not arrivals are up or down from previous years, and water can be withheld from the
current season if they believe they will otherwise face shortages in the coming year.
They try to avoid water shortages in the tourism sector, however, so it is rare that
water is actually withheld from that use--usually they prefer to reallocate water from
agriculture to tourism instead. However, since farmers yields are negatively affected by
"losing" water within the growing season, this may not be the best policy, even
though it is (correctly) reallocating water from a lower-valued use (in terms of money
brought into the country) to a higher-valued use. These managers have attached no
special significance to the situation Ive described, but I suspect that it is important
to represent it explicitly.

If anyone has comments/questions/suggestions of references to the above, please
reply to the list or to me at jenco@powersim.no.

Thanks for the help.

Jen Cover


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[Tom Fiddaman]

Appendix E (Smoothing of Information) of Industrial Dynamics (Jay W.
Forrester, 1961, Productivity Press) is a good reference on exponential
smoothing as a model of expectation formation. It doesnt really work
through a single example, but gives a comprehensive explanation. There are
many examples of smoothing in use throughout the rest of the book, see for
example the explanation for equation 15-8, section 15.5.1.

John Sterman has published several articles on smoothing and trend
extrapolation in expert forecasts of economic variables like energy prices.
I dont have citations, but Im sure you can find them in the SD Society
bibliography.

Hope this helps.

- Tom Fiddaman


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Thomas Fiddaman, Ph.D.
Ventana Systems http://www.vensim.com
34025 Mann Road Tel (360) 793-0903
Sultan, WA 98294 Fax (360) 793-2911
http://web.mit.edu/tomfid/www/ tomfid@premier1.net
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[Jim Hines]

Concerning expectations and extrapolations:

John Sterman has an interesting paper on inflation forecasts which takes a look
at whether smoothing structures can mimic experts predictions (the answer is
yes).

The molecules and associated documentation provide explanations of the
structures used to represent smooths and extrapolations.

The story you tell sounds like it has a couple of potentially interesting
feedback processes: One is a positive loop from tourists to water allocation
back to tourists. The other is a surprising negative loop where extrapolating
tourist growth from last year might make us think that next years season will
be REALLY big, so we withhold water from this season, thereby reducing tourism.

You might want to consider feedback processes involving the farmers. Its clear
how tourist water allocation affects farmers, but how do the farmers affect
tourism? For example, are the quaint farmhouses part of the appeal of the area
for tourists?

Regards,
Jim Hines
LeapTec and MIT
JimHines@interserv.com