Theory of Mind and Game Theory

This paper intends to look at the interaction between two fields of research that are of great interest to economics: Theory of Mind and Game Theory. It looks at the link between the two and to both the role played by, and the implication this has on the assumption of rationality and the common knowledge assumption inherent herein. The result is mixed. Some studies point towards a clear link between Theory of Mind and Game Theory. While other studies have more difficulty establishing this connection, or do so in a way different from our expectations. Based on these results a research idea is proposed to shed more light on our ability to engage in mentalizing ability while participating in strategic interactions.