Strategic Intelligence: The Cognitive Capability to Anticipate Competitor Behavior

41 Pages Posted: 2 May 2013 Last revised: 21 Mar 2017

See all articles by Sheen S. Levine

Sheen S. Levine

University of Texas at Dallas; Columbia University

Mark Bernard

Stockholm School of Economics - Department of Economics

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics

Date Written: March 20, 2017

Abstract

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

Levine, Sheen S. and Bernard, Mark and Nagel, Rosemarie, Strategic Intelligence: The Cognitive Capability to Anticipate Competitor Behavior (March 20, 2017). Available at SSRN: https://ssrn.com/abstract=2258999 or http://dx.doi.org/10.2139/ssrn.2258999

Sheen S. Levine (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Mark Bernard

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
Spain
+34 93 542 3729 (Phone)
+34 93 542 1746 (Fax)

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