Strategic Intelligence: The Cognitive Capability to Anticipate Competitor Behavior
41 Pages Posted: 2 May 2013 Last revised: 21 Mar 2017
Date Written: March 20, 2017
Pursuing sources of entrepreneurial and competitive advantage, researchers have been exploring cognition. We examine how cognitive capabilities affect competitive performance, drawing on two constructs rooted in psychology and economics. A familiar one is analytic skill, the ability to solve abstract problems. To that, we add strategic intelligence — the ability to anticipate competitors’ behavior and preempt it. Using incentivized experiments, we measure the constructs in participants, then let them compete for cash in a highly competitive market. Although the market is designed to eliminate any advantages, whether from market structure or strategic resources, some profit much more than others. We trace performance differences to heterogeneity in analytic skill and strategic intelligence, and show how the two fuel superior performance, even against tough competition.
Keywords: Cognition, Skill, Theory of Mind, Market, Asset, Experiment, Cognitive ability, Bounded rationality, Level-k, Nonequilibrium behavior, Beauty contest, Repeated games, Intelligence, Raven test
JEL Classification: C92, C73, D83
Suggested Citation: Suggested Citation