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Strategic Decisions : Behavioral Differences Between CEOs and Others

Holm, Håkan J. LU ; Nee, Victor and Opper, Sonja LU (2016) In Working Papers 2016(35).
Abstract
Differences in strategic decision making between CEOs and other people are interesting since CEOs make important economic decisions and impact values and norms in society. Our study combines a large stratified random sample of 199 CEOs of medium-size firms with a carefully selected control group of 200 comparable people. All subjects participated in three different incentivized strategic games — Prisoner’s Dilemma, Chicken, Battle-of-the-Sexes. We report substantial and robust differences in both behavior and beliefs between the CEOs and the control group. The CEOs are closer to the socially optimal strategy profile in all games. Hence, as a group the CEOs out-competes the control-group members and thereby receives higher average earnings,... (More)
Differences in strategic decision making between CEOs and other people are interesting since CEOs make important economic decisions and impact values and norms in society. Our study combines a large stratified random sample of 199 CEOs of medium-size firms with a carefully selected control group of 200 comparable people. All subjects participated in three different incentivized strategic games — Prisoner’s Dilemma, Chicken, Battle-of-the-Sexes. We report substantial and robust differences in both behavior and beliefs between the CEOs and the control group. The CEOs are closer to the socially optimal strategy profile in all games. Hence, as a group the CEOs out-competes the control-group members and thereby receives higher average earnings, but not by being smarter (in the narrow “rationalistic” sense) or more selfish, but by being more cooperative and less aggressive. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
strategies, efficiency, Nash equilibrium, incentivized behavior, CEOs, C70, C93, D22, L26
in
Working Papers
volume
2016
issue
35
pages
104 pages
publisher
Department of Economics, Lund University
language
English
LU publication?
yes
id
f3bed4a2-6d8f-41b6-b793-2cc8f96fa0dc
alternative location
http://swopec.hhs.se/lunewp/abs/lunewp2016_035.htm
date added to LUP
2016-12-28 11:16:18
date last changed
2016-12-28 11:16:18
@misc{f3bed4a2-6d8f-41b6-b793-2cc8f96fa0dc,
  abstract     = {Differences in strategic decision making between CEOs and other people are interesting since CEOs make important economic decisions and impact values and norms in society. Our study combines a large stratified random sample of 199 CEOs of medium-size firms with a carefully selected control group of 200 comparable people. All subjects participated in three different incentivized strategic games — Prisoner’s Dilemma, Chicken, Battle-of-the-Sexes. We report substantial and robust differences in both behavior and beliefs between the CEOs and the control group. The CEOs are closer to the socially optimal strategy profile in all games. Hence, as a group the CEOs out-competes the control-group members and thereby receives higher average earnings, but not by being smarter (in the narrow “rationalistic” sense) or more selfish, but by being more cooperative and less aggressive.},
  author       = {Holm, Håkan J. and Nee, Victor and Opper, Sonja},
  keyword      = {strategies,efficiency,Nash equilibrium,incentivized behavior,CEOs,C70,C93,D22,L26},
  language     = {eng},
  month        = {12},
  note         = {Working Paper},
  number       = {35},
  pages        = {104},
  publisher    = {Department of Economics, Lund University },
  series       = {Working Papers},
  title        = {Strategic Decisions : Behavioral Differences Between CEOs and Others},
  volume       = {2016},
  year         = {2016},
}