Do Ceos Differ from Others in Strategic Decision-making?

Abstract: We investigate whether CEOs of private firms differ from other people with regard to strategic decision making. Such differences are interesting since CEOs often make important economic decisions and play a role in creating values and norms in society. We invited 200 CEOs and 200 control group members to participate in three different incentivized strategic games (Prisoner’s Dilemma, Chicken, Battle-of-the-Sexes). We report robust evidence that CEOs’ strategic choices—and their beliefs about others’ behavior—are closer to the social optimal strategy profile in all games. Their beliefs about others are also on average more accurate than those of the control group.