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Who knows it is a game? On strategic awareness and cognitive ability

Published online by Cambridge University Press:  14 March 2025

Dietmar Fehr  and
Steffen Huck
Dietmar Fehr*
Affiliation:
WZB Berlin Social Science Center, Reichpietschufer 50, 10785 Berlin, Germany
Steffen Huck*
Affiliation:
WZB Berlin Social Science Center, Reichpietschufer 50, 10785 Berlin, Germany University College London, Drayton House, 30 Gordon Street, London WC1H OAX, UK
*
dietmar.fehr@wzb.eu
steffen.huck@wzb.eu
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Abstract

We examine strategic awareness in experimental games, that is, the question of whether subjects realize they are playing a game and thus have to form beliefs about others’ actions. We conduct a beauty contest game and elicit measures of cognitive ability and beliefs about others’ cognitive ability. We show that the effect of cognitive ability is highly non-linear. Subjects below a certain threshold choose numbers in the whole interval and their behavior does not correlate with beliefs about others’ ability. In contrast, subjects who exceed the threshold avoid choices above 50 and react very sensitively to beliefs about the cognitive ability of others.

Keywords

Cognitive abilityBeliefsBeauty contestStrategic sophisticationStrategic awareness

JEL classification

C7: Game Theory and Bargaining Theory C9: Design of Experiments
Type
Original Paper
Information
Experimental Economics , Volume 19 , Issue 4 , December 2016 , pp. 713 - 726
Copyright
Copyright © 2015 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-015-9461-0) contains supplementary material, which is available to authorized users.

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