How Cognitive Skills Affect Strategic Behavior: Cognitive Ability, Fluid Intelligence and Judgment

David Gill, Zachary Knepper (), Victoria L. Prowse () and Junya Zhou ()
Additional contact information
Zachary Knepper: Purdue University
Victoria L. Prowse: Purdue University
Junya Zhou: University of Texas at Dallas

No 17168, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We explore the influence of cognitive ability and judgment on strategic behavior in the beauty contest game (where the Nash equilibrium action is zero). Using the level-k model of bounded rationality, cognitive ability and judgment both predict higher level strategic thinking. However, individuals with better judgment choose zero 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 zero.

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: 52 pages
Date: 2024-07
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth and nep-neu
References: Add references at CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp17168.pdf (application/pdf)

Related works:
Working Paper: How Cognitive Skills Affect Strategic Behavior: Cognitive Ability, Fluid Intelligence and Judgment (2023)
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:iza:izadps:dp17168

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().