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Who knows it is a game? On strategic awareness and cognitive ability

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  • Fehr, Dietmar
  • Huck, Steffen

Abstract

We introduce the notion of strategic awareness in experimental games which captures the idea that subjects realize they are playing a game and thus have to form beliefs about others' actions. The concept differs from both, rule understanding and rationality. We then turn to experimental evidence from a beauty contest game where we elicit measures of cognitive ability and beliefs about others' cognitive ability. We show that the effect of cognitive ability is highly non-linear. Subjects' behavior below a certain threshold choose numbers in the whole interval and does not correlate with beliefs about others ability. In contrast, choices of subjects who exceed the threshold avoid choices above 50 and react very sensitively to beliefs about others' cognitive ability.

Suggested Citation

  • Fehr, Dietmar & Huck, Steffen, 2014. "Who knows it is a game? On strategic awareness and cognitive ability," Discussion Papers, Research Unit: Economics of Change SP II 2013-306r, WZB Berlin Social Science Center.
  • Handle: RePEc:zbw:wzbeoc:spii2013306r
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    Cited by:

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    2. Kimbrough, Erik O. & Robalino, Nikolaus & Robson, Arthur J., 2017. "Applying “theory of mind”: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 106(C), pages 209-226.
    3. Joshua Zonca & Giorgio Coricelli & Luca Polonio, 2020. "Gaze patterns disclose the link between cognitive reflection and sophistication in strategic interaction," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(2), pages 230-245, March.
    4. Duffy, Sean & Naddeo, JJ & Owens, David & Smith, John, 2016. "Cognitive load and mixed strategies: On brains and minimax," MPRA Paper 89720, University Library of Munich, Germany.
    5. Deck, Cary & Jahedi, Salar & Sheremeta, Roman, 2021. "On the consistency of cognitive load," European Economic Review, Elsevier, vol. 134(C).
    6. Carlos Alós-Ferrer & Johannes Buckenmaier, 2021. "Cognitive sophistication and deliberation times," Experimental Economics, Springer;Economic Science Association, vol. 24(2), pages 558-592, June.
    7. Grabiszewski, Konrad & Horenstein, Alex, 2020. "Effort is not a monotonic function of skills: Results from a global mobile experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 634-652.
    8. So, Tony, 2020. "Classroom experiments as a replication device," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 86(C).
    9. Cabrales, Antonio & Espin, Antonio & Kujal, Praveen & Rassenti, Stephen, 2017. "Humans' (incorrect) distrust of reflective decisions," CEPR Discussion Papers 11949, C.E.P.R. Discussion Papers.
    10. Despoina Alempaki & Andrew M Colman & Felix Koelle & Graham Loomes & Briony D Pulford, 2019. "Investigating the failure to best respond in experimental games," Discussion Papers 2019-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    11. Carlos Alós-Ferrer & Johannes Buckenmaier, 2018. "Cognitive sophistication and deliberation times," ECON - Working Papers 292, Department of Economics - University of Zurich, revised Apr 2019.
    12. Oren Bar-Gill & Christoph Engel, 2020. "Property is Dummy Proof: An Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2020_02, Max Planck Institute for Research on Collective Goods.
    13. Nir Halevy, 2020. "Strategic thinking and behavior during a pandemic," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(5), pages 648-659, September.
    14. Taylor, Matthew P., 2020. "Heterogeneous motivation and cognitive ability in the lab," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 85(C).

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    More about this item

    Keywords

    strategic awareness; cognitive ability; beauty contest;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D0 - Microeconomics - - General

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