Mental Model Theory And Its Application

New classical economics builds on the assumption of rational man. It is considered that men’s mental activity is rational calculation. However, more and more people challenge this hypothesis. Many experimental economists and experimental psychologists doubt about this hypothesis. On the other side, mental model theory is widely used in brain science, psychology and the manual control community, etc. This paper tries to use the mental model theory widely applying in the brain science and psychology to study human behavior, and then explain institution economic theory. This paper contains two parts. The first part is summarizing research findings on mental model, and the second part is the application of mental model. The former part is summarizing the research findings of mental model in cognitive science, management science, and psychology and brain science. The latter one is trying to use this theory to predict people’s job decision behavior.Firstly, this paper states the mental model theory on the basis of former studies. What’s more, this paper states many research findings in science brain and psychology to support this theory. Secondly, with the help former research findings, this paper use mental model to explain institution and firm theory. Then we describe two kinds of people with high competitiveness and low competitiveness mental models respectively, and two kinds of firms with high competitiveness and low competitiveness mental models respectively define these two mental models by factors. Lastly, through case study and questionnaire survey, this paper gets two conclusions. The first one is that people raising up in one-child family prefer to choose state-owned enterprise; the second is that people having experience working in state-owned enterprise will prefer to choose state-owned enterprise while they change their jobs. The innovation of this paper is on the theoretical aspect.Firstly, this paper states the mental model theory completely, and collects many research findings in science brain and psychology to support this theory.Secondly, this paper uses a new angle to explain institution.Thirdly, this paper verifies the propositions proposed in this paper, and demonstrates the predictive ability of the mental model.