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Cognitive abilities and behavior in strategic-form games.

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Author Info

  • Ralph-C. Bayer

    ()

  • Ludovic Renou

    ()

Abstract

This paper investigates the relation between cognitive abilities and behavior in strategic-form games with the help of a novel experiment. The design allows us first to measure the cognitive abilities of subjects without confound and then to evaluate their impact on behaviour in strategic-from games. We find that subjects with better cognitive abilities show more sophisticated behavior and make better use of information on cognitive abilities and preferences of opponents. Although we do not find evidence for Nash behavior, observed behaviour is remarkably sophisticated, as almost 80% of subjects behave near optimal and outperform Nash behavior with respect to expected pay-offs.

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File URL: http://www.le.ac.uk/economics/research/repec/lec/leecon/dp11-16.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/16.

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Date of creation: Jan 2011
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Handle: RePEc:lec:leecon:11/16

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Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
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Related research

Keywords: cognitive ability; behaviours; strategic-form games; experiments; preferences; sophistication;

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References

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  1. Rey-Biel, Pedro, 2009. "Equilibrium play and best response to (stated) beliefs in normal form games," Games and Economic Behavior, Elsevier, vol. 65(2), pages 572-585, March.
  2. Miguel A. Costa-Gomes & Georg Weizsäcker, 2004. "Stated Beliefs and Play in Normal Form Games," Levine's Bibliography 122247000000000236, UCLA Department of Economics.
  3. El-Gamal, Mahmoud A. & Grether, David M., 1995. "Are People Bayesian? Uncovering Behavioral Strategies," Working Papers 919, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Costa-Gomes, Miguel & Crawford, Vincent P & Broseta, Bruno, 2001. "Cognition and Behavior in Normal-Form Games: An Experimental Study," Econometrica, Econometric Society, vol. 69(5), pages 1193-1235, September.
  5. Miguel A. Costa-Gomes & Georg Weizs�cker, 2008. "Stated Beliefs and Play in Normal-Form Games," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 729-762.
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Cited by:
  1. David Gill & Victoria Prowse, 2013. "Cognitive ability and learning to play equilibrium: A level-k analysis," Economics Series Working Papers 641, University of Oxford, Department of Economics.
  2. Chen, Chia-Ching & Chiu, I-Ming & Smith, John & Yamada, Tetsuji, 2011. "Too smart to be selfish? Measures of intelligence, social preferences, and consistency," MPRA Paper 34438, University Library of Munich, Germany.
  3. Chatterjee, Sidharta, 2011. "The Neuroeconomics of Learning and Information Processing; Applying Markov Decision Process," MPRA Paper 28883, University Library of Munich, Germany.
  4. Chen, Chia-Ching & Chiu, I-Ming & Smith, John & Yamada, Tetsuji, 2012. "Too smart to be selfish? Measures of cognitive ability, social preferences, and consistency," MPRA Paper 41078, University Library of Munich, Germany.
  5. Duffy, Sean & Smith, John, 2012. "Cognitive load in the multi-player prisoner's dilemma game," MPRA Paper 35906, University Library of Munich, Germany.
  6. Duffy, Sean & Smith, John, 2012. "Cognitive load in the multi-player prisoner's dilemma game: Are there brains in games?," MPRA Paper 38825, University Library of Munich, Germany.
  7. Allred, Sarah & Duffy, Sean & Smith, John, 2013. "Cognitive Load and Strategic Sophistication," MPRA Paper 47997, University Library of Munich, Germany.

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