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Circadian effects on strategic reasoning

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Abstract

The ability to strategically reason is important in many competitive environments. In this paper, we examine how relatively mild temporal variations in cognition affect reasoning in the Beauty Contest. The source of temporal cognition variation that we explore is the time-of-day that decisions are made. Our first result is that circadian mismatched subjects (i.e., those making decisions at off-peak time of day) display lower levels of strategic reasoning in the p<1 Beauty Contest but not in the p>1 game. This suggests that a cognitively more challenging environment is required for circadian mismatch to harm strategic reasoning. A second result is that choice adaptation or mimicry (i.e., a more automatic type of responding than what is typically considered to be “learning”) during repeated play is not significantly affected by circadian mismatch. This is consistent with the hypothesis that automatic thought is more resilient to cognitive resource depletion than controlled-thought decision making.

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Notes

  1. Among the examples of Beauty Contests are: pure coordination environments (Keynes 1936), stock market behavior (Ho et al. 1998), threat assessment, driving commute route choice. Behavioral researchers have evaluated such games experimentally (Nagel 1995; Stahl 1996; Duffy and Nagel 1997; Bosch-Domenech et al. 2002; Weber 2003; Costa-Gomes and Crawford 2006; Grosskopf and Nagel 2008), and generally conclude that individuals are strategic but not infinitely rational as assumed by economic theory. Results are consistent with bounded rationality.

  2. This is not a general comment on whether learning requires deliberate thought or not. Complex learning surely engages rational thought processes, as in Hampton et al. (2008). However, the “learning” of the sort engaged in n>2 Beauty Contests with full information feedback is likely more simple. In fact, the simple mimicry of others’ choices is not what most economists would consider “learning”. Thus, we avoid such terminology in our paper.

  3. Clearly, sleep deprivation must be mentioned in any discussion of the effects of sleepiness on decisions. Reduced cognitive performance (Van Dongen et al. 2003; Belenky et al. 2003), increased accident rates (Coren 1996a, 1996b), and decision error (Baldwin and Daugherty 2004; Weinger and Ancoli-Israel 2002) have all been attributed to sleep loss. Though we do not manipulate sleep levels in our experiments, we discuss in the Experiment Design section our use of objective controls regarding sleep levels of our subjects.

  4. We thank a thoughtful reviewer for pointing out that our objective measure of sleep level may be capturing some other omitted variable effects. Though we screen out subjects at risk of major depressive or anxiety disorders, it is possible that other short-term factors may be responsible for variations in sleep across subjects.

  5. It is important to note that, while Coricelli and Nagel (2009) administered multiple rounds of the Beauty Contest, they provided no feedback between trials and they changed p for each trial. Thus, each and every round in their design would be considered a novel task that engaged strategic reasoning, whereas in our setting with feedback it is only the first round of a treatment that engages such reasoning.

  6. We do not include results from these sleep level controls so that attention is not diverted from the circadian mismatch estimates. Our initial intent was to use this experiment design to evaluate the effect of both circadian mismatch and voluntary sleep choice on Beauty Contest outcomes, but the fact that sleep levels are not manipulated and may therefore correlate with some omitted variable has led us to use these variables solely as sleep controls. Estimates from these sleep control variables are statistically significant in Treatment 1 and indicate that voluntary sleep loss may have an even more robust adverse effect on strategic reasoning than circadian mismatch (simple correlation between sleep quantity and circadian mismatch is a statistically insignificant 0.0575). However, we cannot rule out that these variables capture the effects of another omitted variable. Future research that uses a design with an explicit sleep manipulation is needed to properly examine if sleep loss harms strategic reasoning.

  7. Note that in such an environment, very little cognition is required of the subjects and what stands out (if one does not have the winning guess) is whether the subject’s own guess was greater or less than the winning guess. It is this feature that allows us to examine our two distinct hypotheses within the repeated Beauty Contest with feedback.

  8. More detailed results of these additional OLS estimates are available upon request. The estimation of the Guess model for Treatment 1 does indicate that higher NFC scores predict significantly lower guesses (p=0.07, two-tailed test). This effect was estimated as well for the initial round data, although it was not statistically significant in Table 4 due to higher standard errors in the initial round Guess estimates. Interestingly, the result that outcome measures of female subjects are consistent with lower levels of strategic reasoning is rather robust even in these later decision rounds, both in Treatments 1 and 2.

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Acknowledgements

The authors thank the following for helpful comments on different drafts of this paper: Clare Anderson, Dan Houser, Jason Aimone, two anonymous reviewers, and seminar participants at the University of Arizona (Institute for Behavioral Economics), University of Calgary (Psychology), George Mason University, Emory University, GATE economics research institute, the University of Luxembourg (Law, Economics and Finance) and Appalachian State University. The authors gratefully acknowledge funding support from a University Research Council Research Development Award at Appalachian State University. Finally, we thank Valerie Sanchez, Andrew Hunt, Myra Miller, Katie Lambert, and Holt Menzies for valuable research assistance.

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  1. Dept. of Economics, Appalachian State University, Boone, NC, 28608, USA

    David L. Dickinson

  2. Dept. of Psychology, Appalachian State University, Boone, NC, 28608, USA

    Todd McElroy

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Correspondence to David L. Dickinson.

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Appendix: Experiment instructions and methods details

Appendix: Experiment instructions and methods details

1.1 A.1 Sleep data acquisition

The actigraphy devices used are accelerometers with sensitivity of 0.05 g-force, worn on the non-dominant wrist to measure its activity as a proxy for gross motor activity (model AW-64, Phillips Respironics). Data sampling is at epoch lengths of 30-seconds. The devices are impact resistant, water-proof to 1-meter depth for 30 minutes, and can therefore be worn 24-hours a day with few exceptions. The actigraphy data were scored using the manufacturer’s software which, along with complementary sleep diary data, generates an objective and validated measure of total sleep time that does not significantly differ from polysomnography-derived measure (see Kushida et al. 2001, and references therein). In our sample, nightly sleep average between the morning- and evening-types is not significantly different (Mann-Whitney test, p>0.10, two-tail test), indicating no confounding correlation between diurnal preference and sleep levels.

1.2 A.2 Beauty contest experiment instructions

The Beauty Contest was administered through the open-access Veconlab web-based experiments platform at http://veconlab.econ.virginia.edu/gg/gg.php. Instruction pages shown below are for Treatment 1 parameters and a group of 8 individuals (group size varied from 8 to 10 individuals in our experiments). Treatment two instructions altered the allowable guess range and p value fraction. Formatting and subject ID numbers have been removed for this Appendix. A treatment is administered for 10 rounds, after which new instructions appear on screen to describe the new parameterization of the 2nd treatment. We varied the order of whether the Treatment 1 parameters were administered during the first or second block of 10 rounds.

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Dickinson, D.L., McElroy, T. Circadian effects on strategic reasoning. Exp Econ 15, 444–459 (2012). https://doi.org/10.1007/s10683-011-9307-3

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