ICES Seminar in Experimental Economics and Game Theory

Adverse Selection and Contingent Reasoning in Preadolescents and Teenagers

Friday, March 5, 2021 12:00 PM to 1:00 PM
Online Location, Zoom Meeting

The ICES Seminar in Experimental Economics and Game Theory of the Spring 2021 semester will feature:

Isabelle Brocas

University of Southern California

Adverse Selection and Contingent Reasoning in Preadolescents and Teenagers

 

Please contact ICES Office Manager (sbahabib@gmu.edu) for Zoom link.

 

Abstract

We study the foundations for the development of contingent reasoning and the cognitive abilities that facilitate optimal behavior. Individuals from 11 to 17 years old participate in a simplified version of the deterministic “acquire-a-company” adverse selection game. We find that even our youngest subjects understand well the fundamentals of contingent reasoning (offer the reservation price of one of the sellers), although they do not necessarily choose the optimal price. Performance improves steadily and significantly over the developmental window but it is not facilitated by repeated exposure or feedback. High cognitive ability, measured by a high performance in a working memory task, is necessary to behave optimally in the simplest settings but it is not sufficient to solve the most complex situations.

 

For more information about the Seminar Series, please visit the Seminar Schedule homepage.