Cognitive load and strategic sophistication

Abstract

We study the relationship between the cognitive load manipulation and strategic sophistication. The cognitive load manipulation is designed to reduce the subject's cognitive resources which are available for deliberation on a choice. In our experiment, subjects are placed under a large cognitive load (given a di¢ cult number to remember) or a low cognitive load (given a number which is not di¢ cult to remember). Subsequently, the subjects play a one-shot game then they are asked to recall the number. This procedure is repeated for various games, where a new number is given for each game. We …nd a nuanced and nonmonotonic relationship between cognitive load and strategic sophistication. This relationship is consistent with two e¤ects. First, subjects under a high cognitive load tend to exhibit behavior consistent with the reduced ability to compute the optimal decision. Second, the cognitive load tends to a¤ect the subject's perception of their relative standing in the distribution of cognitive ability. The net result of these two e¤ects depends on the strategic setting. Our experiment provides indirect evidence on the literature which examines the relationship between measures of cognitive ability and strategic sophistication.

The effect of cognitive load on economic decision making: A survey and new experiments

“…In the other, subjects were shown pictures of food which would be received in one week. 2 The results of the second experiment reverse the results from the hypothetical task in Experiment 1: people under higher cognitive load acted more impatiently for real money. However we found no evidence that cognitive load affected choices in any of the food treatments.…”

“…The authors find that accuracy in estimation times depends on whether or not the person knows if she will have to make a judgment before completing the task. Allred et al (2015a) find that people under higher load tend to evaluate the length of a line as closer to mean of a comparison group, exacerbating central tendency bias.…”

“…In Experiment 2 we attempt to minimize the uncertainty of future payoffs by requiring that everybody return in one week to collect the bulk of their show-up fee. 2 The first experiment consisted of 1-digit and 8-digit treatment groups. The second experiment consisted of three within subject treatments: no memorization, 2-digit memorization and 8-digit memorization.…”

“…In complex games such as a repeated PD setting, Duffy and Smith (2014) find that cognitive load lowers strategic sophistication as measured by endgame play. Allred et al (2015a) argue that cognitive load acts in strategic games by simultaneously decreasing computational accuracy and the accuracy of beliefs in others' actions.…”

“…Our Experiment 1 reports on a computerized experiment that tests the causal effect that increased cognitive load has on (1) an incentivized arithmetic question, (2) an incentivized binary choice between a safe option and a risky gamble, (3) a hypothetical binary choice between two monetary sums paid at different times, and (4) an incentivized counting task with an uninformative anchor. In our first experiment, participants are given either a 1-digit or an 8-digit number to memorize and are incentivized to keep that number in their memory while completing a randomly determined task.…”