Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 23/2019: If You Could Read My Mind—An Experimental Beauty-Contest Game with Children

Henning Hermes () and Daniel Schunk
Additional contact information
Henning Hermes: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Daniel Schunk: University of Mainz, Chair of Public and Behavioral Economics

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. In addition, we collect measures on cognitive skills and perspective-taking abilities to identify determinants of 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 are predictive only of whether children choose weakly dominated strategies, whereas measures of perspective-taking abilities are strongly linked to successful performance in the BCG. These findings emphasize the importance of perspective-taking abilities for strategic interaction and economic decision-making. Our new design for the experimental BCG allows further study of the development of strategic interaction skills starting already in school age.

Keywords: children; experimental beauty-contest game; guessing game; strategic interaction; decision-making; perspective-taking; theory of mind; empathy; noncognitive skills

JEL-codes: C72; C92

47 pages, November 30, 2019

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