In Level 1, you controlled both inflow and outflow. That was you playing god. Real systems don't work that way. In real systems, the stock itself affects the flows. That's feedback.
Here, the outflow is automatic. The more water in the tank, the faster it drains (think water pressure pushing through a hole at the bottom). Change the inflow and watch the system find its own equilibrium. You don't have to tell it where to settle. It figures it out.
Left: tank with pressure-based drain. Right: stock history approaching equilibrium.
What you just learned
This is a balancing feedback loop, sometimes called negative feedback. "Negative" doesn't mean bad. It means the system opposes change. The higher the stock goes above equilibrium, the harder the outflow pushes it back down. The lower it drops, the less outflow resistance there is.
Balancing loops are everywhere. Your body temperature. Market prices. A thermostat. Any time a system "seeks" a target, there's a balancing loop doing the work. The system doesn't need a manager. The structure is the manager.
Jargon you just learned
- Balancing Loop
- A feedback loop that opposes change. The bigger the gap between current state and goal, the stronger the corrective force.
- Negative Feedback
- Another name for a balancing loop. "Negative" means it counteracts the direction of change, not that it is bad.
- Equilibrium
- The state where inflow equals outflow and the stock stops changing. The system has found its balance point.
- Goal-Seeking
- Behavior where a system moves toward a target. A thermostat is goal-seeking. So is a market price.
- Stability
- The tendency of a system to return to equilibrium after a disturbance.