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Systems 2018, 6(4), 37; https://doi.org/10.3390/systems6040037

Utility Perception in System Dynamics Models

1
New Mexico Water Resources Research Institute, New Mexico State University, Las Cruces, NM 88003, USA
2
Department of Mechanical Engineering, Worcester Polytechnic Institute, Worcester, MA 01609, USA
*
Author to whom correspondence should be addressed.
This paper is an extended version of our paper published in Langarudi, S.P.; Bar-On, I. Utility Perception in System Dynamics Models. In Proceedings of the 35th International Conference of the System Dynamics Society, Cambridge, MA, USA, 16–20 July 2017; p. 5.
Received: 30 July 2018 / Revised: 13 September 2018 / Accepted: 26 September 2018 / Published: 28 September 2018
(This article belongs to the Special Issue Theory and Practice in System Dynamics Modelling)
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Abstract

The utility perceived by individuals is believed to be different from the utility experienced by that individual. System dynamicists implicitly categorize this phenomenon as a form of bounded rationality, and traditionally employ an exponential smoothing function to capture it. We challenge this generalization by testing it against an alternative formulation of utility perception that is suggested by modern theories of behavioral sciences. In particular, the traditional smoothing formulation is compared with the peak–end rule in a simple theoretical model as well as in a medium-size model of electronic health records implementation. Experimentation with the models reveals that the way in which utility perception is formulated is important, and is likely to affect behavior and policy implications of system dynamics models. View Full-Text
Keywords: utility; peak–end rule; smoothing; perception; system dynamics utility; peak–end rule; smoothing; perception; system dynamics
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Langarudi, S.P.; Bar-On, I. Utility Perception in System Dynamics Models. Systems 2018, 6, 37.

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