Cognitive ability and strategic sophistication

•In three experiments we examine the extent to which strategic sophistication is determined by broader cognitive skills.•In Experiment 1 we find strong associations between cognitive ability and sophistication in games requiring iterative dominance and backward induction.•In Experiment 2 we find similar associations in games modified to better capture participantsʼ ability to reason inductively and predict the sophistication of others.•In Experiment 3 we randomly lower the cognitive ability of some participants to identify the causal affect of ability on sophistication.

In three experiments we examine the extent to which strategic sophistication (i.e., inductive reasoning, iterative dominance and level-k thinking) is determined by broader cognitive skills. In the first experiment we replicate previous results showing strong associations between cognitive ability and sophistication in a game of iterative dominance and show that similar results arise in a game requiring induction. In the second two experiments we extend the literature in new directions. In Experiment 2 we modify the games to better capture participantsʼ ability to reason inductively and predict the sophistication of others and, again, find strong associations between cognitive ability, measured using a common IQ test, and sophistication. In Experiment 3 we examine more closely the causal nature of the relationship between cognitive ability and sophistication. We use a standard tool from cognitive psychology to randomly shock the cognitive ability of participants and show that this significantly affects game performance.