September 2014

IZA DP No. 8499: Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma

Extended version published as 'Intelligence Personality and Gains from Cooperation in Repeated Interactions' in: Journal of Political Economy, 2019, 127 (3), 1351-1390

Intelligence affects social outcomes of groups. A systematic study of the link is provided in an experiment where two groups of subjects with different levels of intelligence, but otherwise similar, play a repeated prisoner's dilemma. The initial cooperation rates are similar, it increases in the groups with higher intelligence to reach almost full cooperation, while declining in the groups with lower intelligence. The difference is produced by the cumulation of small but persistent differences in the response to past cooperation of the partner. In higher intelligence subjects, cooperation after the initial stages is immediate and becomes the default mode, defection instead requires more time. For lower intelligence groups this difference is absent. Cooperation of higher intelligence subjects is payoff sensitive, thus not automatic: in a treatment with lower continuation probability there is no difference between different intelligence groups.