Levels of theory-of-mind reasoning in competitive games

The literature on recursive theory of mind (TOM) reasoning in interactive decision making (reasoning of the type I think that you think that I think ...) has been pessimistic, suggesting that adults attribute to others levels of reasoning that are low and slow to increase with learning. In four experiments with college-age adults playing sequential games, we examined whether choices and predictions were consistent with believing that others pursue their immediate self-interest, or with believing that others reason through their own decision making, with fixed-sum games that were simpler and more competitive. This manipulation led to higher-level default TOM reasoning; indeed, reasoning against a lower-level opponent was frequently consistent with assuming the opponent's reasoning to be higher-level, leading to sub-optimal choices. We conclude that TOM reasoning is not of a low level in all game settings; rather, individuals may display effective TOM reasoning, reflecting realistic assumptions about their opponents, in competitive and relatively simple games. Copyright (C) 2010 John Wiley & Sons, Ltd.