Learning, institutions, and economic performance

This article traces mental models as they affect individual cognition, collective learning, and ultimately societal change that affects economics.

Mantzavinos, C., North, D., and Shariq, S. (2004) ‘Learning, Institutions, and Economic Performance’, Perspectives on Politics, vol. 2, no. 1, pp. 75-84 [Online]. DOI: 10.1017/S1537592704000635


  1. Individual learning
  2. Collective learning and change
  3. Collective learning and the emergence of institutions
  4. Economic performance
  5. Path dependence: Cognitive, institutional, and economic
  6. Conclusion


Mental models, beliefs, and cognition

As individuals, we organize and store our knowledge and memories in mental models. We change our mental models as we learn. Over time, when a mental model is reconfirmed by experiences we consider it to be a belief, and a set of related beliefs becomes a belief system.

Shared mental models and collective learning

People within a community develop a common understanding of the world, and use the shared mental models to come up with collective solutions to problems. Knowledge is written down or recorded by other means, and thus transmitted to other regions and generations.

Shared mental models also exist within organizations: ‘As shared mental models evolve within organizations, collective learning takes place with respect to their goals’ (Mantzavinos et al., 2004, p. 77).

Institutions (laws and norms) are ‘shared mental models or shared solutions to recurrent problems of social interaction’ (Mantzavinos et al., 2004, p. 77).

Shared mental models, societal change, and cognitive path dependence

Change happens like this: We start with reality as understood by the human mind, which shapes beliefs. From beliefs come institutions, which create policies. Those policies produce outcomes, which change reality. Our minds then interpret this new reality based on the mental models that already exist.

The process of societal change is a cycle from reality, to beliefs, to institutions, to policies, to outcomes, and back to reality

If the mental models remain basically unchanged for a period of time, then they become belief systems. Belief systems are more rigid and resistant to change, and so they provide cognitive path dependence.

Cognitive path dependence affects institutions in that they follow the same mental models. ‘This institutional path dependence may structure the economic game in a standardized way through time and lead societies to play a game that results in undesirable consequences’ (Mantzavinos et al., 2004, p. 81).

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