Mental models are tools used to explain the process and theory a person uses to understand how something works in the real world. It represents a system of principles that tries to explain the interrelated cause and effect of actions and results. A mental model represents the relation between intuition and reality and beliefs about the risks and rewards of actions within the parameters of reasoning about a process.
Below is an Mental Models cheat sheet info-graphic with examples of 15 Mental Models all traders and investors should know.
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