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Billiards and Brains: Cognitive Ability and Behavior in a p-Beauty Contest

Author

Listed:
  • Burnham, Terence C.

    (Program for Evolutionary Dynamics, Harvard University)

  • Cesarini, David

    (Department of Economics, Massachusetts Institute of Technology)

  • Wallace, Björn

    (Dept. of Economics, Stockholm School of Economics)

  • Johannesson, Magnus

    (Dept. of Economics, Stockholm School of Economics)

  • Lichtenstein, Paul

    (Department of Medical Epidemiology and Biostatistics, Karolinska Institutet)

Abstract

"Beauty contests" are well-studied, dominance-solvable games that generate two interesting results. First, most behavior does not conform to the unique Nash equilibrium. Second, there is considerable unexplained heterogeneity in behavior. In this work, we evaluate the relationship between beauty contest behavior and cognitive ability. We find that subjects with high cognitive ability exhibit behavior that is closer to the Nash equlibrium. We examine this finding through the prism of economic and biological theory.

Suggested Citation

  • Burnham, Terence C. & Cesarini, David & Wallace, Björn & Johannesson, Magnus & Lichtenstein, Paul, 2007. "Billiards and Brains: Cognitive Ability and Behavior in a p-Beauty Contest," SSE/EFI Working Paper Series in Economics and Finance 684, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0684
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    Cited by:

    1. Rydval, Ondrej & Ortmann, Andreas & Ostatnicky, Michal, 2009. "Three very simple games and what it takes to solve them," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 589-601, October.

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    More about this item

    Keywords

    beauty contest; rationality; cognitive ability; Nash equlibrium;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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