How does the mind build a model of reality? I'm interested if there has been any research or experiments that deal with how the human mind creates and perpetuates the idea of knowing something.

I'm struggling to concisely express the question, so a roundabout explanation is in order. I'm thinking of the succession of frameworks that explained how the world works to a layman:


ancient pagan religions, which explained the reality in terms of the complicated interaction of spirits and forces of nature.
Then came monotheistic religions which once again have attempted to explain the world. 
Somewhere in between there have been many forms of philosophy
Then came a myriad of scientific models which are erected in all
domains of science:from biology to psychology, etc.


Each one of these frameworks attempts to explain the world. Each one has been at the cutting edge of thought at the time.  Yet it seems to me that even the most accomplished physicist(the pinnacle of modern knowledge?) may still live with a patchwork of a world model, because said physicist may not be as well versed in neurobiology or some other "arcane" domain of science.

It seems to me that in this chain of succession, because knowledge is preserved, most of the successive models incorporate at least bits and pieces of the previous models. Do individuals build their own models of reality from whatever knowledge is available to their minds? 



In the example above (from Nous on wikipedia), the model is neatly created from the understanding that was available to the medieval mind. I'm interested if this kind of tendency to "fill in the holes" and present a finite understanding of a infinitely(?) complex reality as complete is a natural part of how the human mind works.

For example, would the contemporary physicist's model of reality be primarily shaped by the knowledge of physics, with other knowledge "filling in the holes"?  I know that there are such things as cognitive biases and follies of thought, are these the mechanisms by which the model of the world is shaped?

Thank you for your feedback! This question is rather broad, and I would appreciate if you suggest keywords or names of articles that I can investigate further.
Taking @BenCole's suggestion on the bolded parts...


  how the human mind creates and perpetuates the idea of knowing something


I think the philosophic response to this is "What does it mean to know something?". I'd recommend Searle's Chinese Room argument [1] and the many rebuttals to it (which include some computational explanations of understanding) to get a better idea.


  Do individuals build their own models of reality from whatever knowledge is available to their minds?


The simple answer is yes. But the interesting question is how much of our reality is shared vs how much of it is specific to each individual. In Computational Cognitive Science, the one area that tries to address this separation is Cognitive Architectures. CAs divide rational thought into two parts - the architecture that represents the common functionality across all humans and the knowledge which is different for each of us. For further reading, see Newell's Unified Theories of Cognition [2] for the groundwork, Anderson's How can the human mind occur in the physical universe? [3] for an emphasis on ACT-R (an example CA), and Laird's The Soar cognitive architecture [4] for an emphasis on Soar (another CA). Soar and ACT-R are the big two of the CA field but there are many others. 


  present a finite understanding of a infinitely(?) complex reality as complete.


I'd argue that the opposite is true. That is, instead of presenting reality as complete, the  mind lives off of the differences between its understanding and the reality. Expectation-based cognition suggests that people are always generating expectations of what they expect to sense (see/hear/smell/feel etc) in the near future. These expectations are matched against observations. If expectations and observations match, then all is good. When they don't match, cognition is alerted. In this view, predictions flow top-down and errors (discrepancies between the prediction and the observation) flow bottom-up. Some good references on this idea are [5] and [6]

[1] J. Searle. (1980). Minds, brains and programs. Behavioral and Brain Sciences 3 (3): 417–457.

[2] A. Newell. (1994). Unified theories of cognition. Harvard University Press.

[3] J. Anderson (2007). How can the human mind occur in the physical universe? Oxford University Press.

[4] J. Laird. (2012). The Soar cognitive architecture. MIT Press.

[5] Lee, T.S., Mumford, D. (2003) Hierarchical Bayesian inference in the visual cortex. Journal of Optical Society of America, A. . 20(7): 1434-1448.

[6] Hohwy, J., Roepstorff, A., &amp; Friston, K. (2008). Predictive coding explains binocular rivalry: an epistemological review. Cognition, 108(3), 687-701. ELSEVIER SCIENCE BV. Retrieved from http://discovery.ucl.ac.uk/136548/