Intelligence predicts choice in decision-making strategies

Abstract We analyze how cognitive sophistication shapes the individual balance between two economic decision strategies: model-based, which utilizes a mental map of the environment to calculate the possible outcomes, and model-free, which habitually learns outcomes through trial and error. To address this question, we investigate how individual differences in cognitive ability, proxied by intelligence and working memory, shape the balance of strategies. We provide first evidence that these constructs are directly related to an individual's tendency to model task structures when facing economic choice scenarios. However, structural equation modeling shows intelligence to be the sole predictor of model-based behavior, without any effect of working memory. These findings offer new insights into what factors shape variance from person to person when faced with economic decisions, and inform classical economic models of human behavior.

• Publication year

  2020

• Venue

  Journal of Socio-economics

• Publication date

  2020-02-01

• Fields of study

  Economics, Psychology

• Identifiers
  DOI 10.1016/j.socec.2019.101483
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

• Internal and external validity: Comparing two simple risk elicitation tasks

  2019cited by this paper
• Do smarter people employ better decision strategies? The influence of intelligence on adaptive use of the recognition heuristic

  2018cited by this paper
• Behavioral Finance

  2018cited by this paper
• UvA-DARE ( Digital Academic Repository ) Bayesian inference for psychology . Part

  2018cited by this paper
• What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance

  2018cited by this paper
• The somatic marker hypothesis: revisiting the role of the ‘body-loop’ in decision-making

  2018cited by this paper
• Signatures of multiple processes contributing to fluid reasoning performance

  2018cited by this paper
• On doing better science: From thrill of discovery to policy implications

  2017cited by this paper
• Toward an Understanding of Dynamic Moral Decision Making: Model-Free and Model-Based Learning

  2017cited by this paper
• Working Memory Capacity and Fluid Intelligence

  2016cited by this paper
• Augmenting intelligence: Developmental limits to learning-based cognitive change

  2016cited by this paper
• Rule abstraction, model-based choice, and cognitive reflection

  2016cited by this paper
• Are high-ability individuals really more tolerant of risk? A test of the relationship between risk aversion and cognitive ability

  2016cited by this paper
• Toward the integration of personality theory and decision theory in explaining economic behavior: An experimental investigation

  2016cited by this paper
• Do individuals with higher cognitive ability play more strategically

  2016cited by this paper
• The Psychology and Neuroscience of Financial Decision Making.

  2016cited by this paper
• Comparing decisions under compound risk and ambiguity: The importance of cognitive skills

  2016cited by this paper
• Cognitive (ir)reflection: New experimental evidence☆

  2016cited by this paper
• Cognitive abilities and economic behavior

  2016cited by this paper
• Average player traits as predictors of cooperation in a repeated prisoner's dilemma ☆

  2016cited by this paper
• Shortened complex span tasks can reliably measure working memory capacity

  2015cited by this paper
• Bayesian Cognitive Modeling: A Practical Course

  2014cited by this paper
• Model-based and model-free Pavlovian reward learning: Revaluation, revision, and revelation

  2014cited by this paper
• Cognitive Control Predicts Use of Model-based Reinforcement Learning

  2014cited by this paper
• Dual-process theories of decision-making: A selective survey

  2014cited by this paper
• Goals and Habits in the Brain

  2013cited by this paper
• Stress and multiple memory systems: from 'thinking' to 'doing'.

  2013cited by this paper
• Individual differences in the newsvendor problem: Behavior and cognitive reflection

  2013cited by this paper
• Of goals and habits: age-related and individual differences in goal-directed decision-making

  2013cited by this paper
• Working-memory capacity protects model-based learning from stress

  2013cited by this paper
• Thinking, Fast and Slow

  2012cited by this paper
• Decision-making Competence, Executive Functioning, and General Cognitive Abilities

  2012cited by this paper
• Intelligence: new findings and theoretical developments.

  2012cited by this paper
• IQ, Trading Behavior, and Performance

  2012cited by this paper
• Task rules, working memory, and fluid intelligence

  2012cited by this paper
• Model-based influences on humans’ choices and striatal prediction errors

  2011cited by this paper
• The Cognitive Reflection Test as a predictor of performance on heuristics-and-biases tasks

  2011cited by this paper
• IQ and stock market participation

  2011cited by this paper
• Human and Rodent Homologies in Action Control: Corticostriatal Determinants of Goal-Directed and Habitual Action

  2010cited by this paper
• Rationality and the Reflective Mind

  2010cited by this paper
• Decision making and the avoidance of cognitive demand.

  2010cited by this paper
• Are Risk Aversion and Impatience Related to Cognitive Ability?

  2009cited by this paper
• Complex working memory span tasks and higher-order cognition: A latent-variable analysis of the relationship between processing and storage

  2009cited by this paper
• The role of cognitive skills in economic development

  2008cited by this paper
• Working memory and intelligence are highly related constructs, but why?

  2008cited by this paper
• Dual Processing in Reasoning

  2006cited by this paper
• An automated version of the operation span task

  2005cited by this paper
• Cognitive Reflection and Decision Making

  2005cited by this paper
• Uncertainty-based competition between prefrontal and dorsolateral striatal systems for behavioral control

  2005cited by this paper
• The structure of human intelligence: It is verbal, perceptual, and image rotation (VPR), not fluid and crystallized

  2005cited by this paper
• The generality of working memory capacity: a latent-variable approach to verbal and visuospatial memory span and reasoning.

  2004cited by this paper
• Working memory capacity and its relation to general intelligence.

  2003cited by this paper
• In two minds: dual-process accounts of reasoning.

  2003cited by this paper
• Somatic markers, working memory, and decision making

  2002cited by this paper
• Heuristics and Biases: Individual Differences in Reasoning: Implications for the Rationality Debate?

  2002cited by this paper
• Representativeness revisited: Attribute substitution in intuitive judgment.

  2002cited by this paper
• Performance of Bootstrapping Approaches to Model Test Statistics and Parameter Standard Error Estimation in Structural Equation Modeling

  2001cited by this paper
• Cutoff criteria for fit indexes in covariance structure analysis : Conventional criteria versus new alternatives

  1999cited by this paper
• Deciding Advantageously Before Knowing the Advantageous Strategy

  1997cited by this paper
• The empirical case for two systems of reasoning.

  1996cited by this paper
• Bootstrapping Techniques in Analysis of Mean and Covariance Structures

  1996cited by this paper
• The somatic marker hypothesis and the possible functions of the prefrontal cortex.

  1996cited by this paper
• Reasoning ability is (little more than) working-memory capacity?!

  1990cited by this paper
• Current issues in factor analysis.

  1940cited by this paper
• Intelligence

  1836cited by this paper
• Science Perspectives on Psychological

  year unknowncited by this paper
• Journal of Economic Behavior & Organization Information Processing and Decision-making: Evidence from the Brain Sciences and Implications for Economics

  year unknowncited by this paper
• Journal of Economic Perspectives—Volume 14, Number 1—Winter 2000—Pages 133–141 From Homo Economicus to Homo Sapiens

  year unknowncited by this paper

• Growing decision-making: the role of theory of mind, empathy, and personality traits in school-age children.

  2026cites this paper
• Algorithms for making custom solutions in the digital economy

  2023cites this paper
• Research on Strategic Decision Model of Total Factor Productivity And Its Growth Rate——Take The Strategic Formulation of Equipment Manufacturing Enterprise as an Example

  2023cites this paper
• Financial literacy and consumer culture in behavioral economics as a condition for sustainable development

  2023cites this paper
• Model‐based and model‐free mechanisms in methamphetamine use disorder

  2023cites this paper
• Why Should We Study the Foreign Language Effect: Debiasing through Affecting Metacognition?

  2023cites this paper
• Algorithms for Making Managerial Decisions in the Digital Economy

  2022cites this paper
• Childhood unpredictability, life history, and intuitive versus deliberate cognitive styles

  2022cites this paper
• Humans can navigate complex graph structures acquired during latent learning

  2019cites this paper