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What are Mental Models? And Why Should You Care?

Have you ever stopped to question your perception of the world around you? Have you asked yourself: Is the way you view something really how it is in the real world? More often than not the answer is NO because our current perception of the world serves us quite well. In fact, we barely question it at all because thats how limited our view of the world really is.

But have you stopped to think, that in a world so large and complex, theres more to life than what we see and recognize? For instance, there are so many ways we can look at a problem and at the same time, theres always more than one solution to the same problem. As humans, it can be a challenge to analyze and understand the vast amounts of information present in this world which is why we need mental models.

What are Mental models?
In its most basic form, a mental model is an image or model a person has of the world around them, that is, how they perceive their surroundings. This view varies by each being and it helps shape their behavior and how they react to the different situations they are presented with. However, many people only have one mental model and try to use it to solve a variety of problems.
In 1994, during a speech to business school students, Charlie Munger summarized this with a quote To the man with one hammer, every problem looks like a nail. Possessing just one mental model is equal to having a very narrow perception of the world, which, essentially, is not a great way to operate in the ever-changing world we live in today.

There are numerous mental models that vary by discipline and developing multiple models can help you think more rationally. Here are three mental models used in business, psychology, and economics to help you get started:
Confirmation Bias (Psychology)
Confirmation bias is the tendency of humans to favor the information that aligns with their values and beliefs and ignore everything else that doesnt fit into our perceptions. A great example would be the Buzzfeed personality quizzes like What Harry Potter character are you? Before you even take the quiz, your confirmation bias or the way you perceive yourself has already decided that its Hermione Granger of course!

You have already confirmed the answer to the quiz based on the traits of the character and how they match up to your own personality. This confirmation bias can be applied to our everyday lives as well. Very often we find ourselves making purchases based on confirmation bias and later finding a rational reason to justify the purchase.

  • What are Mental Models? And Why Should You Care?
  • 08 Apr 2019
  • Stock Market

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