Final answer:
The term 'theory of mind' refers to our understanding of how other people's minds work, which is essential for social cognition and cognitive psychology.
Step-by-step explanation:
The term that refers to our knowledge and ideas of how other people's minds work is theory of mind. This concept is critical in understanding cognitive psychology, which focuses on human thinking, and is an integral part of our social cognition. Theory of mind emerges as children develop and is linked to the skill that allows us to imagine what others are thinking and understand that other people have different perspectives and beliefs.
Additionally, supportive social environments, like having a dad that listens to worries, have been found to further develop cognitive empathy, a part of theory of mind. This development continues into adolescence where it plays a significant role in social problem-solving and conflict avoidance.