Mental Models: What They Are, How They Work, And How To Improve Them

Mental models underlie everything – from how you see the world to how you act. Learn what they are, how they work, and how to improve yours.

What Are Mental Models?

Mental models are the structure of your thoughts and actions. They are the framework of ideas and principles that underlie how you process information, reach conclusions, and make decisions.

There are a few different types of mental models:

Models of Knowledge

These are the “big principles” of any field. It is impossible to know all the facts about every field of human study, but having a good grasp of the major principles is important. Models of knowledge are shortcuts for your brain. They allow you to pass information through various ‘filters’, to help make sense of it.

  • An example of big principles: behavioral economists will tell you about “System 1” (fast thinking) and “System 2” (slow thinking). This is a quick shorthand to know about far deeper cognitive mechanisms.
  • An example of information filtering: say you overhear an employee of a company talking about how they’ve been struggling to hit sales goals. A basic understanding of business will tell you that revenue will be lower than expected for the quarter. A basic understanding of the stock market will tell you to avoid buying that stock – and perhaps to short it.

Models of Thought

Models of thought are how your approach information processing and thought formulation. How do you think about things?

One common trap is ideology. The ideological are committed to seeing only one point of view – that of the ideology. This becomes a straitjacket for their thought, restricting them from seeing or accepting different perspectives.

Another is ego. Too many are stubborn in their thinking, making one conclusion and sticking to it no matter what. If you’re unwilling to admit you’re wrong, you’re unlikely to learn many lessons. In fact, you should hope to be wrong.

Take some time to imagine a discussion among your friends and family. Your mind will consider many different models of thought. Some people are highly analytical, looking to solve problems and avoid wordy discussions. Other are emotional, and always looking at the human aspect of any issue. Some people are stubborn and closed-minded, whereas others will always give your ideas a fair shake.

Models of Decision-Making

Your decision-making follows a mental model too. You probably have many different decision models, depending on what’s at stake.

How do you pick between different brands of soap? If you’re like me, what cleans is what cleans, and you just pick at random or based on price.

How do you pick horses at the racetrack? Some people play the odds, others choose names they like.

How do you make investment decisions? Here we separate the savvy from the fools whose money is soon lost.

How Do Mental Models Work?

Knowledge, thought, and decision-making all interact.

  • Your knowledge model provides the structure and facts for your thought
  • Your thought model builds on your knowledge, and processes new information
  • Your decision model puts your knowledge and thought into practice

This is an ideal. Any weak link in the chain will lead to faulty outcomes. Consider that many people are knowledgeable and clear thinkers, yet make seemingly idiotic decisions in their personal lives. They might know what’s right, but their decision model for personal matters is poorly formed.

How Can I Improve My Mental Models?

Knowledge, thought, and decision-making underlie pretty much everything in life. It is important to rigorously test your models – if they’re not providing results, cut them. Many people see their mental models clash with reality, and go into denial, refusing to learn. That path only leads to more losing.

Carry An Arsenal

Different mental models are suited to different purposes. Says Charlie Munger, billionaire vice chairman of Berkshire Hathaway and an exemplary mind:

The first rule is that you’ve got to have multiple models because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does…

It’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models.

Carry an arsenal of mental models and you’ll always have a tool for the job. Knowing how to think emotionally can be useful in closing a sale. But you’ll need sober, analytical thought to run the finances for a business. Mule-like stubbornness might be needed to get through a tough period in life. Yet you’ll find an open mind makes a cocktail party a lot easier to bear.

To put this into practice, you need to accumulate more mental models. Fill gaps in your knowledge of major subjects. If you know nothing about numbers, you’ll have trouble keeping your money right. If you struggle to connect with people emotionally, it’ll be tough going doing anything social. You only need to get the basics right.

Experiment And Evaluate

A mental model that doesn’t work is useless. You’ll see this, for example, with a full-on Communist – the model has been tried, and it failed. Anyone clinging to an old model is emotionally attached for whatever reason, but they’ll find success hard to come by.

Always test your models. Make predictions and see how they end up. I like to bet on outcomes – putting money on the line will quickly weed out those who are all talk.

Remember that no model is perfect. A model that passes many tests is probably a good model. But we thought CDOs were a good model, until the financial system crashed in 2007. The earth seemed flat until someone sailed around it. Actively test, and use the results to update your models.

Use quantity to create quality. The more you know, the more models you have. By testing various models, you’ll quickly find the ones that work the best. But if you’re not growing your knowledge model, your thought and decision models will always be working from the same base matter. I guarantee you someone else is working harder right now.

Seize The Advantage

We’re in a time of tremendous change, and it’s only accelerating. Old mental models are becoming relics, and new thinkers are adapting quickly to the landscape. Many are still stuck with their old models, however. Become aware of yours, learn how they work, and get to improving them. You’ll be a step ahead if you do.


I used various models to write this post. If you’d like to grow your knowledge model, come join me on Twitter, where I also post daily.

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