The Development of Strategic Cognition
Posted: 2 Jun 2020 Last revised: 10 Sep 2020
Date Written: August 31, 2020
Strategy scholars have long supposed that individual cognition can boost competitive advantage, but causal evidence is scarce. Here we empirically explore the competitive role of strategic cognition and two specific skills: strategic intelligence analytic skill. We begin by documenting their heterogeneous distribution, even among those trained in management. Then, we introduce highly competitive markets, where participants vie for cash. We find that performance is well predicted by the possession of the two skills. Next, we ask whether some form of strategic cognition can be developed to affect performance. We introduce a simple treatment, anchored in strategy theory. Treated participants perform much better than the control group. What is more: Markets with treated participants manifest lower inequality in outcomes. If cognitive skills can be developed, it can herald a prescriptive approach to the development of better strategists—and better markets.
Keywords: Competition, Performance, Cognition, Experiment, Market, Cognition, Skill, Theory of Mind, Market, Asset, Experiment, Cognitive ability, Bounded rationality, Level-k, Nonequilibrium behavior, Beauty contest, Repeated games, Intelligence
JEL Classification: C92, C73, D83
Suggested Citation: Suggested Citation