People learn other people's preferences through inverse decision-making

People are capable of learning other people's preferences by observing the choices they make. We propose that this learning relies on inverse decision-making -- inverting a decision-making model to infer the preferences that led to an observed choice. In Experiment 1, participants observed 47 choices made by others and ranked them by how strongly each choice suggested that the decision maker had a preference for a specific item. An inverse decision-making model generated predictions that were in accordance with participants' inferences. Experiment 2 replicated and extended a previous study by Newtson (1974) in which participants observed pairs of choices and made judgments about which choice provided stronger evidence for a preference. Inverse decision-making again predicted the results, including a result that previous accounts could not explain. Experiment 3 used the same method as Experiment 2 and found that participants did not expect decision makers to be perfect utility-maximizers.