*Johan de Kleer*

Most AI diagnostic reasoning approaches model components and but not their interconnections, and when they do model interconnections, they model the possibility that a connection can break, not that two connections may join (e.g., through fluid leakage or electrical short circuit). Two reasons for this limitation are (1) that modeling these interconnection failures could require an exponential number (in the number of interconnections) failure possibilities, and (2) that modeling interconnection failures requires modeling the system at a more precise level which requires far more complex models. A fundamental contribution of this paper is a more powerful approach to modeling connections which does not require special-case post-processing and is computationally tractable. We illustrate our approach in the context of digital systems.