Logical abilities and behavior in strategic-form games

•We test experimentally how cognitive abilities influence play in strategic-form games.•Subjects with higher cognitive ability tend to use more sophisticated strategies in games.•Not even the subjects with the highest cognitive ability use Nash equilibrium strategies.•Subjects with high cognitive ab...

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Bibliographic Details
Published in:Journal of economic psychology 2016-10, Vol.56, p.39-59
Main Authors: Bayer, R.-C., Renou, Ludovic
Format: Article
Language:English
Subjects:
Behavioral decision theory
Behaviors
Cognitive psychology
Experiments
Game theory
Logic
Logical ability
Preferences
Selfishness
Sophistication
Strategic-form games
Studies
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Summary:•We test experimentally how cognitive abilities influence play in strategic-form games.•Subjects with higher cognitive ability tend to use more sophisticated strategies in games.•Not even the subjects with the highest cognitive ability use Nash equilibrium strategies.•Subjects with high cognitive abilities earn higher payoffs than if they had used Nash strategies.•Subjects with low cognitive abilities often behave naively and non-strategically. This paper investigates the impact of cognitive abilities and preferences on behavior in games. We first measure subjects’ logical abilities and social preferences and then evaluate their influence on behavior in strategic-form games. For this purpose, we estimate how logical abilities and preferences relate to the probability of a subject being of a specific behavioral type. We find that better logical abilities increase the likelihood of sophisticated behavior. This shift is stronger for subjects who are classified as “selfish”. However, not even the most logically able, selfish subjects are identified as Nash types.
ISSN:0167-4870
1872-7719
DOI:10.1016/j.joep.2016.05.005