Who knows it is a game? On strategic awareness and cognitive ability

Dietmar Fehr and Steffen Huck

Experimental Economics, 2016, vol. 19, issue 4, No 2, 713-726

Abstract: Abstract We examine strategic awareness in experimental games, that is, the question of whether subjects realize they are playing a game and thus have to form beliefs about others’ actions. We conduct a beauty contest game and elicit measures of cognitive ability and beliefs about others’ cognitive ability. We show that the effect of cognitive ability is highly non-linear. Subjects below a certain threshold choose numbers in the whole interval and their behavior does not correlate with beliefs about others’ ability. In contrast, subjects who exceed the threshold avoid choices above 50 and react very sensitively to beliefs about the cognitive ability of others.

Keywords: Cognitive ability; Beliefs; Beauty contest; Strategic sophistication; Strategic awareness (search for similar items in EconPapers)
JEL-codes: C7 C9 D0 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (24)

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Working Paper: Who knows it is a game? On strategic awareness and cognitive ability (2014)
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DOI: 10.1007/s10683-015-9461-0

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