Intelligence, errors and cooperation in repeated interactions

Proto, E. , Rustichini, A. and Sofianos, A. (2022) Intelligence, errors and cooperation in repeated interactions. Review of Economic Studies, 89(5), pp. 2723-2767. (doi: 10.1093/restud/rdab095)

Abstract

We study how strategic interaction and cooperation are affected by the heterogeneity of cognitive skills of groups of players, over consecutive plays of repeated games with randomly matched opponents using Prisoner’s Dilemma as stage game. We observe overall higher cooperation rates and average final payoffs in integrated treatment groups – where subjects of different IQ levels interact together– than in separated treatment groups. Lower IQ subjects are better off and higher IQ subjects are worse off in integrated groups than in separated groups. Higher IQ subjects adopt harsher strategies when they are pooled with lower IQ subjects than when they play separately. We demonstrate that this outcome should be expected in learning and evolutionary models where higher intelligence subjects exhibit lower frequency of errors in the implementation of strategies. Estimations of errors and strategies in our experimental data are consistent with the model’s assumptions and predictions.

• Item Type: Articles
• Additional Information: The University of Heidelberg provided funding for this research. AR thanks the National Science Foundation, grant NSF 1728056.
• Keywords: Evolutionary games, Learning, repeated prisoners dilemma, cooperation, intelligence, strategy errors.
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Proto, Professor Eugenio
• Authors: Proto, E., Rustichini, A., and Sofianos, A.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Review of Economic Studies
• Publisher: Oxford University Press
• ISSN: 0034-6527
• ISSN (Online): 1467-937X
• Published Online: 27 December 2021
• Copyright Holders: Copyright © 2021 The Authors
• First Published: First published in Review of Economic Studies 89(5): 2723-2767
• Publisher Policy: Reproduced in accordance with the copyright policy of the publisher