POLICIES, DECISIONS AND INFORMATION-SOURCES FOR MODELING

A simulation model is based on explicit statements of policies (or rules) that govern decision making in accordance with conditions that may arise within the system being modeled. The decision-making process consists of three parts - the formulation of a set of concepts indicating the conditions that are desired, the observation of what appear to be the actual conditions, and the generation of corrective action to bring apparent conditions toward desired conditions. The model should generate 'true' conditions of underlying variables but, in general, these true conditions are not available to people in real systems and should likewise not be used directly for decision making in a model. Distorted and delayed information about actual conditions forms the basis for creating the values of desired and also of apparent conditions. Corrective action will in turn be delayed and distorted by the system before influencing actual and then apparent conditions. In modeling business and economic behavior, and in representing policies and decision making, all kinds of information should be used not merely numerical data. Rich stores of information about governing policies and economic structure are available from mental data bases built up from experience and observation.