He will model other sellers as if they were using the one-level models. That is, he thinks they will model others using policy models and make their decisions using the equations presented in Section 4.2. He will try to predict their bids and then try to find a bid for himself that the buyer will prefer more than all the bids of the other sellers. His model of the buyer will also be an intentional model. He will model the buyers as though they were implemented as explained in Section 4.2.
The algorithm he follows is to first use his models of the sellers to
predict what bids 
they will submit. He has a model of the
buyer 
, that tells him
which bid she might pick given the set of bids submitted by
all sellers 
. The seller 
uses this model to determine
which of his bids will bring him higher profit, by first finding the
set of bids he can make that will win:
And from these finding the one with the highest profit:
