CEOs play games cooperatively, and well

We study whether CEOs of private firms differ from other people with regard to their strategic decisions and beliefs about others’ strategy choices. Such differences are interesting since CEOs make decisions that are economically more relevant, because they affect not only their own utility or the well-being of household members, but the utility of many stakeholders inside and outside of the organization. They also play a central role in shaping values and norms in society. We expect differences between both groups, because CEOs are more experienced with strategic decision making than comparable people in other professional roles. Yet, due to the difficulties in recruiting this high-profile group for academic research, few studies have explored how CEOs make incentivized decisions in strategic games under strict controls and how their choices in such games differ from those made by others. Our study combines a stratified random sample of 200 CEOs of medium-sized firms with a carefully selected control group of 200 comparable people. All subjects participated in three incentivized games—Prisoner’s Dilemma, Chicken, Battle-of-the-Sexes. Beliefs were elicited for each game. We report substantial and robust differences in both behavior and beliefs between the CEOs and the control group. The most striking results are that CEOs do not best respond to beliefs; they cooperate more, play less hawkish and thereby earn much more than the control group.

Here is the paper, by Håkan J. Holm, Victor Nee, and Sonja Opper, via the excellent Rolf Degen.

Comments

'They also play a central role in shaping values and norms in society.'

Somebody is thinking about a sinecure in their future.

'they cooperate more, play less hawkish and thereby earn much more than the control group'

Adam Smith might just provide a behavioral economics explanation for this - “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Sau khi chọn được sản phẩm, hãy tiến hành đặt hàng.

I disagree.

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"For our study, we have data for 200 CEOs from private firms in two cities in the Yangzi delta region of China and 200 control group individuals from the same cities."

How much money did those Chinese CEOs pay the researchers to produce this propaganda?

Very interesting study, though it is not necessarily good for everyone else when CEOs act cooperatively, which is why there are antitrust laws to prevent them from doing so.

Completely unsurprising.

Maybe, but this is pretty much the poster-child of studies that are unlikely to replicate.

You've already got the Poster Child of Lefty Responses from Zaua above.... "This is just another skill that CEOs will use for evil."

Well, he was just repeating what another famous lefty wrote - “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

And your intentional misquoting of his actual words demonstrates the sort of distortion that could also easily lead one to call Adam Smith another Poster Child of Lefty Responses. Because clearly, Adam Smith what really wrote is 'This is just another skill that CEOs will use for evil,' right?

A big missed opportunity to look at priming effects here. How do people cooperate when surrounded by life-size CEO cutouts?

The games are played by compensation committees that reward each other beyond handsomely, like this fellow.

Hey now, that's from a non-profit. So we're all good, amirite.

"Our data is not designed to offer con- clusive answers, but we can speculate as to some possible underlying factors in addi- tion to the mechanisms discussed in Sect. 3."

Invite me over next time and I'll provide some conclusive answers. No charge, but some nachos and beer would be nice.

The same results have been shown in people with higher IQ's. CEO's have higher IQ's. This is likely an artifact of that fact.

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May be our paper provides an explanation:

INTELLIGENCE, PERSONALITY AND GAINS FROM COOPERATION IN REPEATED INTERACTIONS

EUGENIO PROTO, ALDO RUSTICHINI, AND ANDIS SOFIANOS

We study how intelligence and personality affect the outcomes of groups, focusing on repeated interactions that provide the opportunity for profitable cooperation. Our experimental method creates two groups of subjects who have different levels of certain traits, such as higher or lower levels of intelligence, Conscientiousness and Agreeableness, but who are very similar otherwise.
Intelligence has a large and positive long-run effect on cooperative behavior. The effect is strong when at the equilibrium of the repeated game there is a tradeoff between short-run gains and longrun losses. Conscientiousness and Agreeableness have a natural, significant but transitory effect on cooperation rates.

(Journal of Political Economy, forthcoming)

I’d love to see additional cohorts for this study, e.g. Japan, German, Silicon Valley, Wall Street, conglomerates

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