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Intelligence, Errors, and Cooperation in Repeated Interactions

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  • Eugenio Proto
  • Aldo Rustichini
  • Andis Sofianos

Abstract

We study how strategic interaction and cooperation are affected by the heterogeneity of cognitive skills of groups of players, over consecutive plays of repeated games with randomly matched opponents using Prisoner’s Dilemma as stage game. We observe overall higher cooperation rates and average final payoffs in integrated treatment groups—where subjects of different IQ levels interact together—than in separated treatment groups. Lower IQ subjects are better off and higher IQ subjects are worse off in integrated groups than in separated groups. Higher IQ subjects adopt harsher strategies when they are pooled with lower IQ subjects than when they play separately. We demonstrate that this outcome should be expected in learning and evolutionary models where higher intelligence subjects exhibit lower frequency of errors in the implementation of strategies. Estimations of errors and strategies in our experimental data are consistent with the model’s assumptions and predictions.

Suggested Citation

  • Eugenio Proto & Aldo Rustichini & Andis Sofianos, 2022. "Intelligence, Errors, and Cooperation in Repeated Interactions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(5), pages 2723-2767.
  • Handle: RePEc:oup:restud:v:89:y:2022:i:5:p:2723-2767.
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    File URL: http://hdl.handle.net/10.1093/restud/rdab095
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    Cited by:

    1. Siting Estee Lu, 2024. "Strategic Interactions between Large Language Models-based Agents in Beauty Contests," Papers 2404.08492, arXiv.org, revised Oct 2024.
    2. Nunnari, Salvatore & Proto, Eugenio & Rustichini, Aldo, 2024. "Cognitive Abilities and the Demand for Bad Policy," IZA Discussion Papers 17112, Institute of Labor Economics (IZA).
    3. Shigeo Morita & Tomoharu Mori, 2024. "The ratchet effect and the probability of proceeding to the next stage: An experiment," Bulletin of Economic Research, Wiley Blackwell, vol. 76(3), pages 797-812, July.
    4. Manja Gärtner & Robert Östling & Sebastian Tebbe, 2023. "Do we all coordinate in the long run?," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 9(1), pages 16-33, June.
    5. Aldo Rustichini, 2023. "Economics with a biological foundation," Indian Economic Review, Springer, vol. 58(1), pages 1-40, June.

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