Cognitive Ability and the Effect of Strategic Uncertainty
28 Pages Posted: 18 Nov 2015
Date Written: November 17, 2015
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 x 2 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.
Keywords: Strategic Uncertainty, Bounded Rationality, Robot, Experiment
JEL Classification: C92, D83
Suggested Citation: Suggested Citation