Neural correlates of our depth of strategic reasoning.

Here is a clip from the introduction to an interesting open access study by Coricellia and Nagel that shows that high-level reasoning and strategic IQ realted to game winning correlates with the neural activity in the medial prefrontal cortex, demonstrating its crucial role in successful mentalizing. The authors use an experimental competitive game, analogous to Keynes's Beauty Contest described below, to characterize the neural systems that mediate different levels of strategic reasoning and mentalizing.

“Professional investment may be likened to those newspaper competitions [Beauty Contest] in which the competitors have to pick out the 6 prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole. It is not a case of choosing those which are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree—to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth, and higher degrees.”

John Maynard Keynes, one of the most influential economists of the 20th century, describes in the above quote different ways of thinking about others in a competitive environment. This can range from low-level reasoning, characterized by self-referential thinking (choosing what you like without considering others' behavior), to higher levels of reasoning, taking into account the thinking of others about others (“third degree”), and so on.

Many features of social and competitive interaction require this kind of reasoning, for example, deciding when to queue for precious theater tickets or when to sell or buy in the stock market before too many others do it. Psychologists and philosophers define this as theory of mind or mentalizing, the ability to think about others' thoughts and mental states to predict their intentions and actions (2–9). Neuroimaging studies have found brain activity related to mentalizing in the medial prefrontal cortex, temporo-parietal junction, superior temporal sulcus, and posterior cingulate cortex. However, little is known about the neural mechanisms underlying the iterated steps of thinking, “what you think the others think about what you think,” and so on. That is, the mechanisms underlying how deeply people think about others, and, particularly, whether deeper mentalizing leads to more successful social outcomes.