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Intelligence, Errors and Strategic Choices in the Repeated Prisoners Dilemma

Author

Listed:
  • Eugenio Proto
  • Aldo Rustichini
  • Andis Sofianos
Abstract
A large literature in behavioral economics has emphasized in the last decades the role of individual differences in social preferences (such as trust and altruism) in influencing behavior in strategic environments. Here we emphasize the role of attention and working memory, and show that social interactions among heterogeneous groups are mediated by differences in cognitive skills. Our design uses a repeated prisoner’s dilemma; we compare rates of cooperation in groups of subjects separated according to their IQ, with those in integrated groups, where subjects of different IQ are pooled together. In integrated groups we observe higher aggregated cooperation rates and profits than in separated groups. There are gains in earnings among lower IQ subjects who learn how to cooperate faster than when they play separately, and smaller losses for higher IQ subjects. We also see that higher IQ subjects become less lenient when they are matched with lower IQ subjects than when they play separately. This pattern is an instance of a general phenomenon, which we demonstrate in an evolutionary game theory model, in which higher IQ among subjects induces –possibly thanks to better working memory– a lower frequency of errors in strategy implementation. We show that players indeed choose less-lenient strategies in environments in which subjects have higher error rates. Estimations of errors and strategies from the experimental data are consistent with the hypothesis and model’s predictions.

Suggested Citation

  • Eugenio Proto & Aldo Rustichini & Andis Sofianos, 2020. "Intelligence, Errors and Strategic Choices in the Repeated Prisoners Dilemma," Working Papers 2020_07, Business School - Economics, University of Glasgow.
    • Handle: RePEc:gla:glaewp:2020_07
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    References listed on IDEAS

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    Cited by:

    1. Dal Bó, Pedro & Fréchette, Guillaume R. & Kim, Jeongbin, 2021. "The determinants of efficient behavior in coordination games," Games and Economic Behavior, Elsevier, vol. 130(C), pages 352-368.
    2. Michalis Drouvelis & Graeme Pearce, 2021. "Understanding the Link between Intelligence and Lying," CESifo Working Paper Series 9223, CESifo.
    3. Masaki Aoyagi & Guillaume Frechette & Sevgi Yuksel, 2021. "Beliefs in Repeated Games," ISER Discussion Paper 1119rr, Institute of Social and Economic Research, Osaka University, revised May 2022.
    4. Zakharov, Alexei & Bondarenko, Oxana, 2021. "Social status and social learning," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
    5. Drouvelis, Michalis & Pearce, Graeme, 2023. "Is there a link between intelligence and lying?," Journal of Economic Behavior & Organization, Elsevier, vol. 206(C), pages 182-203.
    6. Masaki Aoyagi & Guillaume Frechette & Sevgi Yuksel, 2021. "Beliefs in Repeated Games," ISER Discussion Paper 1119, Institute of Social and Economic Research, Osaka University.
    7. Brocas, Isabelle & Carrillo, Juan D., 2022. "Adverse selection and contingent reasoning in preadolescents and teenagers," Games and Economic Behavior, Elsevier, vol. 133(C), pages 331-351.
    8. Kirchkamp, Oliver & Oechssler, Joerg & Sofianos, Andis, 2021. "The Binary Lottery Procedure does not induce risk neutrality in the Holt & Laury and Eckel & Grossman tasks," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 348-369.

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    More about this item

    Keywords

    Repeated Prisoners Dilemma; Cooperation; Intelligence; IQ; Strategy; Error in Transition;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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