A Causal Model of Theory of Mind in Conflict for Artificial Intelligence

Inferring others' beliefs requires more than reading surface signals; it requires tracking who told them what, in what order, and how credibly. The Theory of Mind Utility (ToM-U) formalizes this epistemic state inference problem at the computational level of analysis, specifying what mentalizing computes and why without commitment to algorithmic or neural implementation. ToM-U achieves this by constructing Local Epistemic World Models (LEWMs) -- directed typed graphs that represent agents, state nodes, and the epistemic relationships among them -- and evaluating discrete candidate LEWMs against observed behavior until one achieves sufficient confidence. Five formal definitions specify the LEWM structure, agent node properties including ordered information access history, a bounded proliferation mechanism for recursive mentalizing, three inference procedures, and a residue function that captures the structured trace left by failed mentalizing attempts. ToM-U differs from Bayesian Theory of Mind and adjacent formal accounts, which presuppose rather than derive belief states, and from simulation theory and theory-theory, which lack a formal apparatus for epistemic state inference. The architecture generates directional, falsifiable predictions about mentalizing failure that follow from structural properties of the model rather than auxiliary assumptions, and positions ToM-U as a domain-agnostic mechanism upstream of goal inference and other downstream social cognitive processes.

Theory of Mind (ToM), the ability to track others epistemic state, makes humans efficient collaborators. AI agents need the same capacity in multi agent settings, yet existing benchmarks mostly test literal ToM by asking direct belief questions. The ability act optimally on implicit beliefs in embodied environments, called functional ToM, remains largely untested. We introduce EnactToM, an evolving benchmark of 300 embodied multi-agent tasks set in a 3D household with partial observability, private information, and constrained communication. Each task is formally verified for solvability and required epistemic depth, and new tasks are generated increase difficulty as models improve. On the hard split, all seven evaluated frontier models score 0.0% Pass^3 on functional task completion, while averaging 45.0% on literal belief probes. Manual analysis traces 93% of sampled failures to epistemic coordination breakdowns such as withheld information, ignored partner constraints, and misallocated messages, providing a concrete target for future work.

Theory of Mind (ToM) is essential for agent interactions, yet existing evaluations either rely on static scenarios that oversimplify mental-state reasoning or interactive settings that provide limited diagnostic insight. We present Avalon-ToM-Bench, a fine-grained benchmark that operationalizes ToM through the asymmetric-information mechanics of The Resistance: Avalon. Rather than evaluating end-to-end gameplay, it decomposes ToM into a 2$\times$2 taxonomy -- epistemic versus motivational reasoning crossed with inference versus action -- using human-crafted, perspective-constrained queries. Benchmarking 28 LLMs reveals three insights: 1) Reasoning, not knowledge. Models show strong game-rule comprehension but markedly weaker ToM abilities, isolating failures to social reasoning rather than missing domain knowledge. 2) Expression, not representation. Mechanistic analyses via linear probing and activation steering show that models frequently represent correct mental-state inferences in their hidden states but fail to express them during generation -- linear probes recover 77-82% accuracy versus 62-70% from the models' own chain-of-thought. 3) Policy, not deliberation. Dedicated reasoning training yields substantial improvements whereas test-time chain-of-thought provides only marginal gains (+11.0 versus +1.1 points on average), suggesting that robust ToM depends on a learned reasoning policy rather than increased inference-time deliberation.