Applying 'Theory of Mind': Theory and Experiments

Abstract

This paper investigates our capacity to attribute preferences to others. This ability is intrinsic to game theory, and is a central component of “Theory of Mind”, perhaps the capstone of social cognition. In particular, this component of theory of mind allows individuals to learn more rapidly in strategic environments with an element of novelty. We show here that the capacity to attribute preferences yields a clear advantage over less sophisticated approaches to strategic interaction (such as reinforcement learning) because it allows agents to extrapolate to novel circumstances information about counterparts’ preferences that was learned previously. We report experiments investigating this capacity in simple extensive form games. We find significant learning of others’ preferences, providing evidence for the presence and effectiveness of this aspect of theory of mind. Moreover, scores on survey measures of autism-spectrum tendencies are significant determinants of individual learning, so our notion of theory of mind is related to the notion as it is understood in psychology.

Keywords: Theory of Mind, Game Theory, Learning, Experiments

JEL Classification: C9, C7, D8