Game Theory Interactions with Self Deception

“Self deception is useful only when you’re playing against an opponent who can take your mental state into account,” write Kevin Simler and Robin Hanson in The Elephant in the Brain. “Sabotaging yourself works only when you’re playing against an opponent with a theory-of-mind.” 
When we think about other people and their actions, we don’t just look at the hard facts of what happened. We spend a lot of time trying to read small cues and context to understand why someone did something. We project ourselves into the situation, we imagine other people in their situation, and sometimes we even imagine a person from space with no human social awareness in the situation. We strive to understand what types of mental processes and thoughts may have been taking place in the person’s head at the time of an action or decision. From sports, to politics, to office gossip, we attempt to guess the mental state of others, we hold a theory of what is taking place in their mind.
This is a key part of game theory. We have to be able to deduce that others are thinking something and that they are interpreting, reacting to, and making decisions about a given situation and will change their behavior in response to the way that we think and behave. In this world, social decisions and consequences along with individual actions become very complex very fast. What often matters is not so much a given outcome, but the intent behind the outcome. Was this person just trying to make themselves richer, or did they have more altruistic motives of helping everyone? Did this person really want to develop a new type of road to help improve traffic, or again, were they just out for themselves? Is my crime conspirator going to rat me out, or will he keep his mouth shut? These are the types of questions and things we think about when we assume other people have minds that work like ours. 
This brings in self-deception. If we are always looking at others trying to sort out their motives, and if they are doing the same to us, then we better have a really  good poker face when we are lying–or when we are just not quite telling the full truth. “we, humans, must self-deceive. Those who refuse to play such mind games will be at a disadvantage relative to others who play along,” the authors white in their book. Many of us have probably been in a situation where we tried to be truthful and honest, but were afraid that someone who was not truthful could interfere with our plans by seeming to be honest but really lying. They may have made great impressions and possibly gotten the reward we hoped for, ultimately preventing us from doing something good while they scammed the situation. This is why we are under pressure to self-deceive, to over promise, to inflate ourselves, and to fudge the details. After all, if we know we can do something the best, we better make sure we have the chance and don’t have it stolen by someone else who might be lying and less capable. Competing with other smart social creatures encourages self-deception so that we can feel good about ourselves and appear more genuine when we are distorting the facts so that we can get ahead.

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