On Cognitive Ability and Learning in a Beauty Contest
We reinvestigate a version of the beauty contest originally developed by Keynes (1936) with a focus on cognitive reflection. Using a sample of 166 undergraduate students at a regional university in Florida, we confirm previous research by Burnham et al. (2009) that cognitive reflection, as measured by Frederick's (2005) cognitive reflection test, matters in the first round of the game; players with a higher CRT score pick significantly lower numbers, and their responses cluster more. Unlike previous research, however, we find that cognitive ability is important only when faced with a new situation. In subsequent rounds of the game, cognitive ability is subordinate to a learning effect and players' responses and the variability of responses are not significantly related to CRT scores. This finding is important in financial markets, since it implies that anticipating the decisions and actions of other players is a function of experience, not necessarily cognitive ability.
Volume (Year): 11 (2011)
Issue (Month): 2 (Fall)
|Contact details of provider:|| Web page: http://www.mtsu.edu/~jeeEmail: |
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Burnham, Terence C. & Cesarini, David & Johannesson, Magnus & Lichtenstein, Paul & Wallace, Björn, 2009. "Higher cognitive ability is associated with lower entries in a p-beauty contest," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 171-175, October.
- Gary Klein, 1999. "Sources of Power: How People Make Decisions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611465, June.
When requesting a correction, please mention this item's handle: RePEc:mts:jrnlee:v:11:y:2011:i:2:p:13-24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sally Govan)
If references are entirely missing, you can add them using this form.