| 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 difficult number to remember) or a low cognitive load (given a
number which is not difficult 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 find
a nuanced and nonmonotonic relationship between cognitive load and strategic
sophistication. This relationship is consistent with two effects. 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 affect the subject's perception of their relative standing in
the distribution of cognitive ability. The net result of these two effects
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. |