TY  - RPRT
        AU  - Gill, David
AU  - Knepper, Zachary
AU  - Prowse, Victoria L.
AU  - Zhou, Junya
        TI  - How Cognitive Skills Affect Strategic Behavior: Cognitive Ability, Fluid Intelligence and Judgment
        PY  - 2024/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17168
        UR  - https://www.iza.org/publications/dp17168
        AB  - We explore the influence of cognitive ability and judgment on strategic behavior in the beauty contest game (where the Nash equilibrium action is zero). Using the level-k model of bounded rationality, cognitive ability and judgment both predict higher level strategic thinking. However, individuals with better judgment choose zero less frequently, and we uncover a novel dynamic mechanism that sheds light on this pattern. Taken together, our results indicate that fluid (i.e., analytical) intelligence is a primary driver of strategic level-k thinking, while facets of judgment that are distinct from fluid intelligence drive the lower inclination of high judgment individuals to choose zero.
        KW  - cognitive ability
KW  - judgment
KW  - fluid intelligence
KW  - matrix reasoning
KW  - beauty contest
KW  - strategic sophistication
KW  - level-k
KW  - experiment
KW  - game theory
        ER  -