Intelligence, errors and cooperation in repeated interactions

Proto, E. , Rustichini, A. and Sofianos, A. (2021) Intelligence, errors and cooperation in repeated interactions. Review of Economic Studies, (doi: 10.1093/restud/rdab095) (Early Online Publication)

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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.
Status:Early Online Publication
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 2021
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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