I'm trying to 'drop' a blanket with tassels onto a sofa using cloth simulation and am having trouble making the tassels behave realistically. I am using the surface deform modifier to deform the blanket using a simple subdivided plane, and am then applying the cloth simulation to that plane.
I have used a hair particle system to add fringes to the blanket, and have turned on hair dynamics. However, when I play the simulation, the blanket deforms fine but the fringes don't behave very dynamically. Either all the fringes stay in exactly the same orientation, or several of them end up facing upwards and in both cases they don't deform along their length at all, behaving more like solid rods than tassels.
Blend file can be found here