Have you ever wondered about life? Have you tried to sit down and think why all of this is happening? Well if you have, then you have a pre-occupied mental model in your brain.
You are using this over time, but do not realize that you are using it. As humans, everyone is different and comes from different backgrounds. This changes the way our brain works and shapes the way we act.
And to understand life in regards to this manner, we are going to look at the concept of mental models and how this mindset works in the real world.
1. What Is A Mental Model?
A mental model is a concept or a framework that explains to us how things work in and around our minds. It helps us to understand life and how your mind constructs meaning to it. It is being used as a tool to understand a specific problem and improves your ability to solve problems.
Mental models tend to give you a new spectrum through which you can see the world quite differently from how you used to see it and change your perception of life. It gives purpose to life as to why we prefer some things over others and simplifies the complex systems that are in our lives.
In times when there is so much information put in your brain. It is good that the mental models help us in keeping all the information that is complex into a simple thing in each model.
2. Formation Of Mental Models
When you look at how these mental models are formed within ourselves. Primarily the reason will be the cognitive process that happens within ourselves and external influences. Be it cultural backgrounds, education, geography, etc. As one gets exposed to different kinds of perspectives on seeing things, we see the formation of mental models.
One way to understand mental models is through the concept of “latticework,” as described by Charlie Munger, Vice Chairman of Berkshire Hathaway. He suggests that mental models form the foundation of our understanding and decision-making. Without a solid latticework of mental models, our knowledge and insights remain isolated and fragmented.
3. How To Use Mental Models In Real Life
So, if you look at the world as a patchwork of systems or models. You can use these models to identify the core components which helps you to understand how the system works. In the real world, the way system works will be complex compared to what we see in the paper.
For example, let us take the first principle, a mental model used by SpaceX to reduce complex systems. In this model, they actively question every assumption known and create new knowledge to create solutions from scratch. The team SpaceX looks at how past incremental rocket improvements are made to re-examine the concept of space flight from scratch.
But while practicing this system in real life some questions need to be answered. You need to make sure that this system is already efficient in the past. Even if it is not proven to be efficient in the past, it must have an ironclad core principle based on which you take the decision. It should be made sure that the systems will improve the quality of decisions that are being made.
4. Examples Of Mental Models
Many mental models are being used across the globe that help in proper decision making which ultimately leads to achieving the desired outcome.
4.1 Circle Of Competence
It is a simple mental model popularized by Warren Buffett. It explains how in life we go through some experience or conduct some study that helps us build knowledge in that area. Well, this circle of competence emphasizes giving importance to what we know best. Staying in this circle will help you to make better decisions.
4.2 Inversion Mental Model
This is an interesting mental model that helps us in decision-making by taking a different route. Instead of focusing on how to achieve the final desired outcome, this tells us to consider looking at the problem or decision from an opposite point of view.
So, this way you would not only focus on achieving the results but also on how to avoid failure. By identifying the potential pitfalls you can have higher chances to improve the success rate in the decision making.
4.3 Bayes’ Theorem
It is a mental model that describes the probability of something happening based on relevant factors and evidence. Bayes’ Theorem allows you to make more accurate predictions and decisions by considering past results and current conditions. So, you evaluate the probability of all these things before making decisions or predictions.
4.4 Confirmation Bias
Confirmation bias is the human nature of looking at things in a way that reinforces what you already believe in. It is a common mental model that affects your ability to make objective decisions. It is a natural tendency to look into things that are similar to your existing beliefs. To overcome confirmation bias, you need to challenge your assumptions and actively seek out different perspectives and interpretations of the information available to you.
4.5 Hanlon’s Razor
Hanlon’s Razor is a philosophical razor that suggests a way of eliminating explanations for human behaviour. It encourages us to give people the benefit of the doubt and consider alternative explanations before making judgments. “Never attribute to malice that which can be adequately explained by stupidity” is the quote that explains the whole concept of Hanlon’s razor.
4.6 Fundamental Attribution Error
The Fundamental Attribution Error is the tendency to attribute someone’s behaviour to their character rather than considering situational factors. This mental model reminds us to be mindful of our judgments and to consider the context in which someone’s actions occur. This model is a way of looking at all the possible outcomes that could have happened in a situation rather than pre-judgmental notions of your brain.
4.7 Occam’s Razor
Occam’s Razor is a mental model that suggests the simplest explanation is usually the correct one. It advises you to avoid unnecessary complexity and seek the most straightforward solution to a situation or a problem. By applying this mental model, you can streamline your decision-making process and avoid overcomplicating situations. It is a classic principle of logic and problem-solving.
Redundancy is a mental model that emphasizes the importance of backup systems and preparedness. By incorporating redundancy into our processes and strategies, we can reduce the risk of total failure and ensure continuity.
4.8 Jealousy Tendency
Jealousy Tendency refers to the different motivations behind envy. It distinguishes between productive envy, which drives us to improve and achieve success, and malicious envy, which seeks to undermine or harm others. By understanding our motivations and recognizing envy in others, we can positively channel our competitive drive and avoid destructive behaviours.
4.9 Second-Order Thinking
This mental model is a way of thinking that goes up and beyond. Meaning that the decision-making and thinking process should not only think about the immediate consequences. But also the subsequent effect of those actions. This is a holistic way of thinking that improves quality in decision-making.
4.10 Pareto Principle
Pareto Principle states that roughly 80% of the results come from 20% of the inputs. It is also known as the 80/20 rule. This principle helps you identify the most valuable activities within a system and prioritize them first. By focusing on the key areas of impact, you can achieve significant results with less effort.
4.11 Opportunity Costs
It is an idea that is developed in the sense that every choice we make comes at the expense of another option. This mental model reminds us to consider the trade-offs involved in decision-making and weigh the potential benefits and drawbacks of each choice. Using this, we can make good decisions and prioritize resources.
4.12 Law Of Diminishing Returns
This law tells us that if you focus and allocate more resources to a particular activity, the incremental benefits will decrease over time. It helps to avoid excessive investments in less productive areas to save huge amounts of resources.
5. Importance of Mental Models
5.1 Helps In Decision Making And Problem-Solving
The Mental model makes us perceive and evaluate the decision-making process. With the help of framing an accurate and well-developed mental model, you can make informed decisions and creative problem-solving strategies that help in reacting to any actions.
5.2 Improve Understanding
Mental models help in making complex situations much simpler and easier to understand. They provide a framework for interpreting new information, bridging gaps in knowledge, and facilitating comprehension. By employing mental models, we can simplify complexity, identify patterns, and create mental shortcuts for efficient decision-making.
5.3 Reacting To Change
Mental models give a heads-up to the changing environment. So, this way you can anticipate changes and react accordingly. By having a flexible mental model, you can navigate uncertain situations and adjust your strategies based on them. This is done by recognizing patterns, identifying trends, and predicting future scenarios.
6. Mental Models In Economics
6.1 Game Theory
It is a mental model that helps you in understanding how relationships and trust work. It describes humans as more rational than they are. It is an umbrella term for the science of logical decision-making that is used widely in economics. And helps in creating an efficient market hypothesis.
6.2 Comparative Advantage
It describes the economic reality of work gains that arise from differences in factor endowments. In economic terms, someone has a comparative advantage in producing a particular good if they can produce it at a lower opportunity cost.
This concept of utility helps us to understand the value of additional units (Marginal Utility). But if you see in real-world situations, that utility diminishes as time goes by. This utility contributes hugely to economic growth.
Mental models are powerful tools that can enhance our thinking, decision-making, and problem-solving abilities. By adopting a systematic approach and utilizing diverse frameworks. By recognizing and refining our mental models, we can improve our ability to comprehend complex situations, adapt to change, and make informed choices. These models explain deduction and induction. So, in a valid deduction, the conclusion holds for all models of the premises. And in induction, knowledge eliminates possibilities.
With mental models as your guide, you can confidently tackle challenges, seize opportunities, and achieve success in an ever-changing world. For human beings, the way they use these mental models will help them understand the long-term consequences for which they are up.
Johnson-Laird developed the model theory that assumes that people do not innately rely on formal rules of inference, but they tend to rely upon those mental models that are based on their understanding of premises and general knowledge. And human reasoning is based on these mental models.
The mental models are part of a lot of areas of study like physics, chemistry, economics, biology, etc. In all these areas, there are underlying concepts or tools that help in making conscious decisions. The concept of mental models is expanded in each of these areas like supply and demand, diversification, and efficient market hypothesis in economics. Anchoring, status quo, the illusion of control in psychology. Heredity, signaling and equilibrium in biology. Critical mass, velocity, and relativity in physics.
Your working memory does not have the power to hold onto information that can have an everlasting impact on your brain. So, to anticipate events by keeping in mind past experiences. You will depend on the structured model that is being formulated in your brain to remember isolated facts.
Cultivating a habit of continuous learning, critical thinking, and collaboration enables us to expand and refine our mental models throughout our lives. As we navigate the ever-evolving world, the conscious development of mental models empowers us to become more effective thinkers, decision-makers, and problem solvers. That will help in reach the heights of our growth and fasten the evolution process at a speeder rate.