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Consequences of misspecified mental models: Contrasting effects and the role of cognitive fit

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  • Dirk Martignoni
  • Anoop Menon
  • Nicolaj Siggelkow

Abstract

Research summary: Mental models, reflecting interdependencies among managerial choice variables, are not always correctly specified. Mental models can be underspecified, missing interdependencies, or overspecified, containing nonexistent interdependencies. Using a simulation model, we find that under‐ and overspecification have opposite effects on exploration, and thereby, performance. The effects are also opposite, depending on whether a manager controls all choice variables. The mechanism underlying our results is a feedback loop: misspecified mental models influence managerial learning about the effectiveness of choices; this learning guides how the environment is explored, which in turn, affects which information will be generated for future learning. We explore implications of these results for strategic management and introduce the notion of “cognitive fit” between the mental model of the decision‐maker and the strategic environment. Managerial summary: Managers often rely on mental models to guide their decision‐making. These mental models, however, are often misspecified, that is, more or less complex than the situation managers are facing. Using a simulation model, we study the consequences of such misspecified mental models. We find that the performance implications of misspecified mental models crucially depend on whether the manager controls all choice variables. We identify situations in which simpler mental models are better than overly complex ones, and vice versa. Copyright © 2015 John Wiley & Sons, Ltd.

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  • Dirk Martignoni & Anoop Menon & Nicolaj Siggelkow, 2016. "Consequences of misspecified mental models: Contrasting effects and the role of cognitive fit," Strategic Management Journal, Wiley Blackwell, vol. 37(13), pages 2545-2568, December.
  • Handle: RePEc:bla:stratm:v:37:y:2016:i:13:p:2545-2568
    DOI: 10.1002/smj.2479
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    2. Luis Camilo Ortigueira-Sánchez & Xavier Gimbert Ràfols, 2018. "Institutionalism and Economic Development in Peru: A Senior Executive’s View from the Application of Augmented Fuzzy Cognitive Maps," Revista Internacional de Gestión del Conocimiento y la Tecnología (GECONTEC), Revista Internacional de Gestión del Conocimiento y la Tecnología (GECONTEC), vol. 6(1), pages 15-38, March.
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    6. Joon Mahn Lee & Jung Chul Park & Guoli Chen, 2023. "A cognitive perspective on real options investment: CEO overconfidence," Strategic Management Journal, Wiley Blackwell, vol. 44(4), pages 1084-1110, April.
    7. Yasar, Alperen, 2023. "Power struggles and gender discrimination in the workplace," SocArXiv t4g83, Center for Open Science.
    8. Giovanni Dosi & Marco Faillo & Virginia Cecchini Manara & Luigi Marengo & Daniele Moschella, 2017. "The formalization of organizational capabilities and learning: results and challenges," LEM Papers Series 2017/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    9. Miles M Yang & Feifei Yang & Tingru Cui & Ying-Chu Cheng, 2019. "Analysing the dynamics of mental models using causal loop diagrams," Australian Journal of Management, Australian School of Business, vol. 44(3), pages 495-512, August.
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