Thinking in Systems: A Primer

A balancing feedback loop is a self-regulating mechanism that stabilizes a stock by opposing whatever direction of change is imposed on the system. This type of loop seeks to maintain a stock at a particular value or within an acceptable range by pulling it back toward a goal. For example, a thermostat maintains room temperature by turning heat on when the room gets too cold and turning it off when the room gets too warm. Balancing feedback loops create equilibrium and resistance to change, serving as sources of stability in systems.

Bounded rationality refers to the concept that individuals make decisions based on incomplete information and limited perspective rather than perfect knowledge of an entire system. Economist Herbert Simon introduced this term to challenge classical economic theory’s assumption that humans act as perfectly rational optimizers with complete information. In systems thinking, bounded rationality explains why people acting reasonably within their own context often produce collectively undesirable outcomes. For example, fishermen may overfish because they lack complete information about fish populations and other fishermen’s catches, leading to the depletion of their own livelihood. Meadows argues that changing system behavior requires redesigning information flows and incentive structures rather than simply replacing individuals, since anyone in the same position faces identical constraints.