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Why don't well-educated adults understand accumulation? A challenge to researchers, educators, and citizens

  • Cronin, Matthew A.
  • Gonzalez, Cleotilde
  • Sterman, John D.
Registered author(s):

    Accumulation is a fundamental process in dynamic systems: inventory accumulates production less shipments; the national debt accumulates the federal deficit. Effective decision making in such systems requires an understanding of the relationship between stocks and the flows that alter them. However, highly educated people are often unable to infer the behavior of simple stock-flow systems. In a series of experiments we demonstrate that poor understanding of accumulation, termed stock-flow failure, is a fundamental reasoning error. Persistent poor performance is not attributable to an inability to interpret graphs, lack of contextual knowledge, motivation, or cognitive capacity. Rather, stock-flow failure is a robust phenomenon that appears to be rooted in failure to appreciate the most basic principles of accumulation, leading to the use of inappropriate heuristics. We show that many people, including highly educated individuals with strong technical training, use what we term the "correlation heuristic", erroneously assuming that the behavior of a stock matches the pattern of its flows. We discuss the origins of stock-flow failure and implications for management and education.

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    Article provided by Elsevier in its journal Organizational Behavior and Human Decision Processes.

    Volume (Year): 108 (2009)
    Issue (Month): 1 (January)
    Pages: 116-130

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    Handle: RePEc:eee:jobhdp:v:108:y:2009:i:1:p:116-130
    Contact details of provider: Web page: http://www.elsevier.com/locate/obhdp

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    1. John D. Sterman, 1989. "Modeling Managerial Behavior: Misperceptions of Feedback in a Dynamic Decision Making Experiment," Management Science, INFORMS, vol. 35(3), pages 321-339, March.
    2. Camerer, Colin F & Hogarth, Robin M, 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 7-42, December.
    3. Gonzalez, Cleotilde, 2005. "Decision support for real-time, dynamic decision-making tasks," Organizational Behavior and Human Decision Processes, Elsevier, vol. 96(2), pages 142-154, March.
    4. Sterman, John & Booth Sweeney, Linda, 2002. "Cloudy Skies: Assessing Public Understanding of Global Warming," Working papers 4361-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    5. Don N. Kleinmuntz, 1985. "Cognitive Heuristics and Feedback in a Dynamic Decision Environment," Management Science, INFORMS, vol. 31(6), pages 680-702, June.
    6. Sterman, John D., 1989. "Misperceptions of feedback in dynamic decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 43(3), pages 301-335, June.
    7. Diehl, Ernst & Sterman, John D., 1995. "Effects of Feedback Complexity on Dynamic Decision Making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 62(2), pages 198-215, May.
    8. Atkins, Paul W. B. & Wood, Robert E. & Rutgers, Philip J., 2002. "The effects of feedback format on dynamic decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 88(2), pages 587-604, July.
    9. Roch, Sylvia G. & Lane, John A. S. & Samuelson, Charles D. & Allison, Scott T. & Dent, Jennifer L., 2000. "Cognitive Load and the Equality Heuristic: A Two-Stage Model of Resource Overconsumption in Small Groups," Organizational Behavior and Human Decision Processes, Elsevier, vol. 83(2), pages 185-212, November.
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