TY  - RPRT
        AU  - Gill, David
AU  - Prowse, Victoria L.
        TI  - Cognitive Ability, Character Skills, and Learning to Play Equilibrium: A Level-k Analysis
        PY  - 2014/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 8236
        UR  - https://www.iza.org/publications/dp8236
        AB  - In this paper we investigate how cognitive ability and character skills influence behavior, success and the evolution of play towards Nash equilibrium in repeated strategic interactions. We study behavior in a p-beauty contest experiment and find striking differences according to cognitive ability: more cognitively able subjects choose numbers closer to equilibrium, converge more frequently to equilibrium play and earn more even as behavior approaches the equilibrium prediction.
To understand better how subjects with different cognitive abilities learn differently, we estimate a structural model of learning based on level-k reasoning. We find a systematic positive relationship between cognitive ability and levels; furthermore, the average level of more cognitively able subjects responds positively to the cognitive ability of their opponents, while the average level of less cognitively able subjects does not respond. Finally, we compare the influence of cognitive ability to that of character skills, and find that both cognition and personality affect behavior and learning. More agreeable and emotionally stable subjects perform better and learn faster, although the effect of cognitive ability on behavior is stronger than that of character skills.
        KW  - cognitive ability
KW  - character skills
KW  - personality traits
KW  - level-k
KW  - bounded rationality
KW  - learning
KW  - convergence
KW  - non-equilibrium behavior
KW  - beauty contest
KW  - repeated games
KW  - structural modeling
KW  - theory of mind
KW  - intelligence
KW  - IQ
KW  - cognition
KW  - Raven test
        ER  -