Theory of Mind in the Mod Game: An Agent-Based Model of Strategic Reasoning

When people engage in social interactions, they often rely on their theory of mind, their ability to reason about unobservable mental content of others such as beliefs, goals, and intentions. This ability allows them to both understand why others behave the way they do as well as predict future behaviour. People can also make use of higher-order theory of mind by applying theory of mind recursively, and reason about the way others make use of theory of mind such as in the sentence “Alice believes that Bob does not know about the surprise party”. In this paper, we use agent-based models to describe human behaviour in an n-player extension of rock-paper-scissors called the Mod game. In previous work, we have shown how in similar competitive settings, the ability to make use of higher orders of theory of mind can be beneficial. We find that characteristic cyclic behaviour in the choices of participants that contradicts equilibrium predictions from classical game theory can be explained through the application of higher orders of theory of mind. Our results suggest that participants engage in higher orders of theory of mind reasoning in repeated play of the Mod game than previously reported in normal-form games and in repeated rock-paper-scissors games.