How cognitive skills affect strategic behavior: Cognitive ability, fluid intelligence and judgment

David Gill, Zachary Knepper, Victoria Prowse and Junya Zhou

Purdue University Economics Working Papers from Purdue University, Department of Economics

Abstract: We explore the influence of cognitive ability and judgment on strategic behavior in the beauty contest game. Using the level-k model of bounded rationality, cognitive ability and judgment both predict higher level strategic thinking. However, individuals with better judgment choose the Nash equilibrium action less frequently, and we uncover a novel dynamic mechanism that sheds light on this pattern. Taken together, our results indicate that fluid (i.e., analytical) intelligence is a primary driver of strategic level-k thinking, while facets of judgment that are distinct from fluid intelligence drive the lower inclination of high judgment individuals to choose the equilibrium action.

Keywords: cognitive ability; judgment; fluid intelligence; matrix reasoning; beauty contest; strategic sophistication; level-k; experiment; game theory (search for similar items in EconPapers)
JEL-codes: C72 C92 D91 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2023-11
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://business.purdue.edu/research/working-papers-series/2023/1337.pdf (application/pdf)

Related works:
Working Paper: How Cognitive Skills Affect Strategic Behavior: Cognitive Ability, Fluid Intelligence and Judgment (2024)
Working Paper: How Cognitive Skills Affect Strategic Behavior: Cognitive Ability, Fluid Intelligence and Judgment (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pur:prukra:1337

Access Statistics for this paper

More papers in Purdue University Economics Working Papers from Purdue University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Business PHD ().