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The Power of Open-Minded Simplicity in Mental Models
Conference paper

The Power of Open-Minded Simplicity in Mental Models

Daniel Albert, Dirk Martignoni, Anoop Menon and Nicolaj Siggelkow
Academy of Management Annual Meeting Proceedings, v 2022(1)
Aug 2022
DOI: https://doi.org/10.5465/AMBPP.2022.323

Abstract

The mental models held by managers -- their cognitive representations of the real word -- have an important effect on decision making and influence the way experiences are encoded. Mental models contain performance expectations of different actions, and higher-level beliefs of contingencies, i.e., whether prior experiences in one setting are applicable in other settings, a contingency model. While a growing literature has explored how first-order learning of performance expectations is affected by fixed contingency models that do not reflect reality correctly, relatively little is known how second-order learning with respect to the higher-level contingency model affects decision outcomes. Using a computer simulation built on prior theory and models of learning and cognition, we find that a simple mental model that is refined over time tends to lead to higher performance than a complex mental model that is simplified over time. Our findings suggest that the ubiquity of relatively simple mental models may not only be a reflection of cognitive limitations, but also an evolutionary advantageous outcome of a dynamic learning process.

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