Contests are largely driven by resource value, but their outcome also depends on asymmetries in fighting ability between contestants. Consequently, individuals benefit from assessing these asymmetries when deciding to engage opponents or retreat. Yet, there is much about these assessments that we do not know. First, it is often difficult to discriminate whether individuals only assess their own fighting ability or if they compare it to that of their opponents by mutual assessment. Second, the extent to which assessment improves over the course of a contest, as predicted by theory, has remained largely unexplored. We addressed these questions by studying assessment during territorial contests between male Siamese fighting fish, Betta splendens. Findings show the consistent use of mutual assessment when deciding to engage opponents, with a progressive increase in assessment accuracy over sequential contest phases by reducing the use of dishonest signals. Importantly, contrary to theoretical expectations, we found evidence of a novel form of mutual assessment in which fight motivation increased (rather than decreased) when contestants assessed their opponents as more formidable than themselves. Although contestants shifted to opponent-only assessment when adjusting display and attack, the collective evidence shows greater aggressive intent towards more threatening opponents. We argue that explanations for this form of assessment may be provided by considering territorial dynamics related to reproductive success and parental investment.