Matthew A. Cronin
School of Management
George Mason University
mcronin@gmu.edu
Cleotilde Gonzalez
Dynamic Decision Making Laboratory
Social and Decision Sciences Department
Carnegie Mellon University
conzalez@andrew.cmu.edu
John D. Sterman
System Dynamics Group
MIT Sloan School of Management
jsterman@mit.edu
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. Poor performance has been ascribed to artifacts including complex information displays, lack of contextual knowledge, the cognitive burden of calculation, or the inability to interpret graphs. Here, we demonstrate that poor understanding of accumulation, termed stock-flow failure, is more fundamental. In a series of experiments, we find that persistent poor performance is not attributable to an inability to interpret graphs, contextual knowledge, motivation, or cognitive capacity. Rather, stock-flow failure is a robust phenomenon that appears to be difficult to overcome. We discuss the origins of stock-flow failure and implications for management and education.