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

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Author Info
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)

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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.

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Publisher Info
Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 684.

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Length: 27 pages
Date of creation: 10 Dec 2007
Date of revision:
Handle: RePEc:hhs:hastef:0684

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Related research
Keywords: beauty contest; rationality; cognitive ability; Nash equlibrium;

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Find related papers by JEL classification:
C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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