Mentally freeze time at when A receives 4 and pretend you are B. When A receives 4, you don't know yet whether A received 4. Hence, you can assume the worst and

Mentally freeze time at when A receives 4 and pretend you are B. When A receives 4, you don't know yet whether A received 4. Hence, you can assume the worst and assume that A didn't receive 4. You know that A has sent 3. However, you can assume the worst and assume that A thinks that A has failed to send you 3. After all, you don't know that A has just received 4. You know that A has received 2 because you received 3 from A. But does A know that you know that A has received 2? As we said earlier, you think pessimistically that A thinks A has failed to send 3 to you (even though you did receive 3!). And so you think that A doesn't know that you know that A has received 2. In other words, you think that A thinks that you think you have failed to send 2. And so on. I found it helpful to draw it out. Draw a human with the letter B on their T shirt holding a letter labelled 3 and create a cartoon thought bubble on top of their head. Inside that thought bubble write the text "I wonder if A got my letter 4 but assuming they didn't this is how I picture them..." and draw a human with the letter A on their T shirt holding a letter labelled 2 and create a cartoon thought bubble on top of their head.... The final thought bubble should say "I wonder if B got my letter 1 but assuming they didn't I will not attack."