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

Fehr, D; Huck, S; (2016) Who knows it is a game? On strategic awareness and cognitive ability. Experimental Economics , 19 (4) pp. 713-726. 10.1007/s10683-015-9461-0. Green open access

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Abstract

We examine strategic awareness in experimental games, that is, the question of whether subjects realize they are playing a game and thus have to form beliefs about others’ actions. We conduct a beauty contest game and elicit measures of cognitive ability and beliefs about others’ cognitive ability. We show that the effect of cognitive ability is highly non-linear. Subjects below a certain threshold choose numbers in the whole interval and their behavior does not correlate with beliefs about others’ ability. In contrast, subjects who exceed the threshold avoid choices above 50 and react very sensitively to beliefs about the cognitive ability of others.

Type: Article
Title: Who knows it is a game? On strategic awareness and cognitive ability
Open access status: An open access version is available from UCL Discovery
DOI: 10.1007/s10683-015-9461-0
Publisher version: http://dx.doi.org/10.1007/s10683-015-9461-0
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Cognitive ability, Beliefs, Beauty contest, Strategic sophistication, Strategic awareness
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/1573569
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