If You Could Read My Mind—An Experimental Beauty-Contest Game with Children

Abstract

We develop a new design for the experimental beauty-contest game (BCG) that is suitable for children in school age and test it with 114 schoolchildren aged 9-11 years as well as with adults. In addition, we collect a measure for cognitive skills to link these abilities with successful performance in the game. Results demonstrate that children can successfully understand and play a BCG. Choices start at a slightly higher level than those of adults but learning over time and depth of reasoning are largely comparable with the results of studies run with adults. Cognitive skills, measured as fluid IQ, are predictive only of whether children choose weakly dominated strategies but are neither associated with lower choices in the first round nor with successful performance in the BCG. In the implementation of our new design of the BCG with adults we find results largely in line with behavior in the classical BCG. Our new design for the experimental BCG allows to study the development of strategic interaction skills starting already in school age.

Keywords: children, experimental beauty-contest game, guessing game, strategic interac- tion, decision-making, cognitive skills, noncognitive skills

JEL Classification: C72, C92