Children Base Their Investment on Calculated Pay-Off

To investigate the rise of economic abilities during development we studied children aged between 3 and 10 in an exchange situation requiring them to calculate their investment based on different offers. One experimenter gave back a reward twice the amount given by the children, and a second always gave back the same quantity regardless of the amount received. To maximize pay-offs children had to invest a maximal amount with the first, and a minimal amount with the second. About one third of the 5-year-olds and most 7- and 10-year-olds were able to adjust their investment according to the partner, while all 3-year-olds failed. Such performances should be related to the rise of cognitive and social skills after 4 years.