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    Munger: Importance of mental models

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    Consider Munger's thoughts on the importance of mental models. Respond to the following:
    • In your own words, describe what Munger means by mental models.
    • Examine how Munger's concept of mental models has changed your ideas of decision making in investment management and business.
    • Describe at least one example from your own experience where your perspective or experience provided a mode of thought that brought new light to a discussion or a tough decision.
    • Explain how this experience has affected your decision-making process.

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    Solution Preview

    Mental models are a way of making sense with the world and our immediate environment. Charles T Munger is Vice-Chairman of Berkshire Hathaway, one of the largest companies in the world, and the developer of the Mental Models concept. One point in his article makes it clear "Mental models are useful to the extent that they edit the world around us down to what we perceive as the essentials." Based on mental models, one can construct one's plans with regard to money and investments. We experience our surroundings and interpret it according to what has worked for us before. It is clear that learning is the process of adjusting our mental models so as to make them more useful to us.

    Munger's concept of mental models takes TQM a step further. Total Quality Management is a constant testing and improvement of business practices. Mental models is ...

    Solution Summary

    This is a consideration of author, lecturer and investment billionaire Charlie Munger's thoughts on the meaning and importance of mental models. It includes a consideration of Munger's thoughts on his definition and importance of mental models, and how it can affect a reader's view of decision making in investment management and business, and in other areas.