Recent research suggests that managers often make strategic decisions in novel situations by utilizing past experiences to reason by analogy. However, there is substantial evidence that decision makers often fail to identify and apply knowledge about one situation to a similarly structured...

This paper focuses on the role of managerial cognition as a source of heterogeneity in firm strategies and performance. We link differences in mental models to differences in decision rules and performance in a management simulation. Our results show more accurate mental models lead to better...