Model Calibration as a Testing Strategy for System Dynamics Models

Model Calibration as a Testing Strategy for System Dynamics Models
Rogelio Oliva Mays Business School, 325M Wehner - 4217 TAMU, College Station, TX 77843 Phone (979) 862-3744; Fax (979) 845-5653 roliva@tamu.edu

Oliva R. 2003. Model Calibration as a Testing Strategy for System Dynamics Models. European Journal of Operational Research 151(3):552-568.

Abstract System dynamics models are becoming increasingly common in the analysis of policy and managerial issues. The usefulness of these models is predicated on their ability to link observable patterns of behavior to micro-level structure and decision-making processes. This paper posits that model calibration ‚ the process of estimating the model parameters (structure) to obtain a match between observed and simulated structures and behaviors ‚ is a stringent test of a hypothesis linking structure to behavior, and proposes a framework to use calibration as a form of model testing. It tackles the issue at three levels: theoretical, methodological, and technical. First, it explores the nature of model testing, and suggests that the modeling process be recast as an experimental approach to gain confidence in the hypothesis articulated in the model. At the methodological level, it proposes heuristics to guide the testing strategy, and to take advantage of the strengths of automated calibration algorithms. Finally, it presents a set of techniques to support the hypothesis testing process. The paper concludes with an example and a summary of the argument for the proposed approach. (System Dynamics; Simulation; Hypotheses testing; Model calibration; Parameter estimation)

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