How much does it help to know what she knows you know? An agent-based simulation study

In everyday life, people make use of theory of mind by explicitly attributing unobservable mental content such as beliefs, desires, and intentions to others. Humans are known to be able to use this ability recursively. That is, they engage in higher-order theory of mind, and consider what others believe about their own beliefs. In this paper, we use agent-based computational models to investigate the evolution of higher-order theory of mind. We consider higher-order theory of mind across four different competitive games, including repeated single-shot and repeated extensive form games, and determine the advantage of higher-order theory of mind agents over their lower-order theory of mind opponents. Across these four games, we find a common pattern in which first-order and second-order theory of mind agents clearly outperform opponents that are more limited in their ability to make use of theory of mind, while the advantage for deeper recursion to third-order theory of mind is limited in comparison.