Intelligence Disclosure and Cooperation in Repeated Interactions

Abstract

How does information about players’ intelligence affect strategic behavior? Game theory, based on the assumption of common knowledge of rationality, does not provide useful predictions. We experimentally show that, in the Prisoner’s Dilemma, disclosure hampers cooperation: higher-intelligence players trust their partners less when playing against someone of lower ability. Similarly, in the Battle of Sexes with low payoff inequality, disclosure disrupts coordination, as higher-intelligence players try to force their most preferred outcome. Instead, with higher payoff inequality, behavior changes and higher-intelligence players concede. We analyze the reasons for these patterns of behavior. (JEL C72, C73, C92, D83, D91)