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Cognitive ability and the effect of strategic uncertainty

Author

Listed:
  • Nobuyuki Hanaki

    (Université Nice Sophia Antipolis
    Skema Business School)

  • Nicolas Jacquemet

    (Paris School of Economics and University Paris 1 Panthéon-Sorbonne, Centre d’Economie de la Sorbonne)

  • Stéphane Luchini

    (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)

  • Adam Zylbersztejn

    (Université de Lyon and Université de Lyon 2
    CNRS, GATE Lyon Saint-Etienne)

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 $$2 \times 2$$ 2 × 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, 2016. "Cognitive ability and the effect of strategic uncertainty," Theory and Decision, Springer, vol. 81(1), pages 101-121, June.
    • Handle: RePEc:kap:theord:v:81:y:2016:i:1:d:10.1007_s11238-015-9525-9
    DOI: 10.1007/s11238-015-9525-9
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    8. Takehito Masuda & Ryo Mikami & Toyotaka Sakai & Shigehiro Serizawa & Takuma Wakayama, 2020. "The net effect of advice on strategy-proof mechanisms: An experiment for the Vickrey auction," ISER Discussion Paper 1109, Institute of Social and Economic Research, Osaka University.
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    10. March, Christoph, 2019. "The behavioral economics of artificial intelligence: Lessons from experiments with computer players," BERG Working Paper Series 154, Bamberg University, Bamberg Economic Research Group.
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    12. 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 & University of Caen) 2017-11, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    13. Kiss, H.J. & Rodriguez-Lara, I. & Rosa-García, A., 2016. "Think twice before running! Bank runs and cognitive abilities," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 12-19.
    14. Wei James Chen & Meng-Jhang Fong & Po-Hsuan Lin, 2023. "Measuring Higher-Order Rationality with Belief Control," Papers 2309.07427, arXiv.org, revised Dec 2024.
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    20. Ogawa, Kazuhito & Kawamura, Tetsuya & Matsushita, Keiichiro, 2020. "Effects of cognitive ability and age on giving in dictator game experiments," Research in Economics, Elsevier, vol. 74(4), pages 323-335.

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    More about this item

    Keywords

    Strategic uncertainty; Bounded rationality; Robot; Experiment;
    All these keywords.

    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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