AN ANALYSIS OF THE IMPACT OF CHAOTIC DYNAMICS ON MANAGEMENT INFORMATION-FLOW MODELS

Defined very broadly, Chaos Theory is the study of the behavior of dyn amic, nonlinear, feedback equations which, with certain parameters, pr oduce random-appearing output, although all parts of the equation syst em are deterministic. In this research we use the insights provided by the study of Chaos Theory to investigate how chaos can impact managem ent dynamics and thus influence managerial decision-making. It is comm on to use dynamic mathematical models as aids to management. If model formulation is such that the model produces chaotic output under certa in circumstances, decisions based on the use of that model are serious ly compromised. Further, when several models are used concurrently, th e interactions between them may cause output to be chaotic even if no individual model exhibits such behavior. We provide an explanation of the reasons why this may happen, and illustrate the consequences throu gh an example. (C) 1997 Published by Elsevier Science B.V.