Evolution of theories of mind

This paper studies the evolution of peoplesʼ models of how other people think – their theories of mind. This is formalized within the level-k model, which postulates a hierarchy of types, such that type k plays a k times iterated best response to the uniform distribution. It is found that, under plausible conditions, lower types co-exist with higher types. The results are extended to a model of learning, in which type k plays a k times iterated best response the average of past play. The model is also extended to allow for partial observability of the opponentʼs type.