DP16656 Intelligence Disclosure and Cooperation in Repeated Interactions

Author(s): Marco Lambrecht, Eugenio Proto, Aldo Rustichini, Andis Sofianos
Publication Date: October 2021
Keyword(s): Cooperation, Intelligence, IQ, Repeated Prisoners Dilemma
JEL(s):
Programme Areas: Labour Economics, Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16656

We investigate in a laboratory setting whether revealing information on intelligence affects behavior in games with repeated interactions. In our experimental design we communicate information on the cognitive ability of both players. We use three stage games: Prisoners' Dilemma (PD) and two versions of Battle of Sexes (BoS), with high and low payoff inequality. We find that the information affects strategic behavior significantly in two distinct ways. In PD, disclosure markedly hampers cooperation, as higher intelligence players are less cooperative once they are made aware that they play against someone of lower ability than themselves in the disclosure treatment. Similarly, in BoS with low payoff inequality, disclosure disrupts coordination on outcomes with positive payoffs, as higher intelligence players try to force their most preferred outcome onto the less intelligent. However, in BoS with high payoff inequality, this pattern of behavior dramatically changes. Disclosure does not significantly affect coordination rates. Differently from the low payoff inequality game, coordination is achieved more often on outcomes that favor less intelligent players. We conjecture that when coordination becomes more difficult, because of the high inequality between payoffs, intelligence and inequality together form a coordination device.