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for me it is an NP-hard-like reasoning. I'm not only concerned with my effect on the 3 other participants, i'm concerned with each participant's effect on each participant.

I agree with this. I also believe this is why socially normal (i.e. not socially awkward, not shy) people can have problem talking in crowds. Needs more cognitive overhead to analyze what words may cause what on certain people.

The article does mention the recursive nature of theory of mind like you note.

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