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Cognitive ability and the effect of strategic uncertainty

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  • Nobuyuki Hanaki

    () (GREDEG, Université Nice Sophia Antipolis, and Skema Business School. 250 Rue Albert Einstein, 06560, Valbonne, France)

  • Nicolas Jacquemet

    () (Paris School of Economics and University Paris 1 Panthéon-Sorbonne. MSE, 106 Bd de l'hopital, 75013 Paris)

  • Stéphane Luchini

    () (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France; Université Lyon 2, Lyon, F-69007, France)

  • Adam Zylbersztejn

    () (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France; Université Lyon 2, Lyon, F-69007, France)

Abstract

How is one’s cognitive ability related to the way one responds to strategic uncertainty? We address this question by conducting a set of experiments in simple 2 x 2 dominance solvable coordination games. Our experiments involve two main treatments: one in which two human subjects interact, and another in which one human subject interacts with a computer program whose behavior is known. By making the behavior of the computer perfectly predictable, the latter treatment eliminates strategic uncertainty. We find that subjects with higher cognitive ability are more sensitive to strategic uncertainty than those with lower cognitive ability.

Suggested Citation

  • Nobuyuki Hanaki & Nicolas Jacquemet & Stéphane Luchini & Adam Zylbersztejn, 2015. "Cognitive ability and the effect of strategic uncertainty," Working Papers 1529, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
  • Handle: RePEc:gat:wpaper:1529
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    References listed on IDEAS

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    Cited by:

    1. Allred, Sarah & Duffy, Sean & Smith, John, 2016. "Cognitive load and strategic sophistication," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 162-178.
    2. João V. Ferreira & Nobuyuki Hanaki & Benoît Tarroux, 2017. "On the Roots of the Intrinsic Value of Decision Rights: Evidence from France and Japan," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2017-11, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    3. Nobuyuki Hanaki & Nicolas Jacquemet & Stéphane Luchini & Adam Zylbersztejn, 2016. "Fluid intelligence and cognitive reflection in a strategic environment: evidence from dominance-solvable games," PSE - Labex "OSE-Ouvrir la Science Economique" hal-01359231, HAL.
    4. Nicolas Jacquemet & Stephane Luchini & Jason Shogren & Adam Zylbersztejn, 2011. "Coordination with Communication under Oath," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00635801, HAL.

    More about this item

    Keywords

    Strategic Uncertainty; Bounded Rationality; Robot; Experiment;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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