Cognitive ability and the effect of strategic uncertainty

Cognitive ability and the effect of strategic uncertainty

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Article ID: iaor20162455
Volume: 81
Issue: 1
Start Page Number: 101
End Page Number: 121
Publication Date: Jun 2016
Journal: Theory and Decision
Authors: , , ,
Keywords: information, behaviour, decision theory, simulation
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 × 2 equ1 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.

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