Game Theory's Hidden Assumption: Intentionality Homogeneity and the Failure of Corporate Criminal Liability

Von Neumann and Morgenstern (1944), Nash (1951), and Aumann (1976) formalized strategic interaction assuming all players share the same intentionality level. T his paper identifies that hidden assumption and tests its consequences for corporate criminal liability. Corporations optimize payoffs without recursive social reasoning (Level 1 intentionality). Prosecutors expect cooperation requiring common knowledge formation, shame, and reciprocity (Level 3 intentionality). When these levels differ, Nash equilibrium cannot exist and Aumann's common knowledge cannot form. The resulting Dennett-Nash Gap yields an 8.33- point systematic advantage for corporations over prosecutors. I test these predictions using Argentina's Law 27401 (2017) and the OECD Anti-Bribery Convention across 41 countries. Four structural paradoxes emerge: legal provisions presume corporate "interest," "tolerance," "spontaneous reporting," and "ethical culture" - all Level 3 concepts applied to Level 1 entities. Implementation failure is architecturally necessary, not contingent on enforcement capacity. leveraging Level 1 implication: design Policy optimization (strict liability, algorithmic monitoring) rather than expecting Level 3 cooperation (ethics codes, voluntary compliance).