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

  • 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)

"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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Paper provided by Stockholm School of Economics in its series SSE/EFI 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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