Theorists have sought to identify the key selection pressures that drove the evolution of our species’ cognitive abilities, life histories and cooperative inclinations. Focusing on two leading theories, each capable of accounting for many of the rapid changes in our lineage, we present a simple experiment designed to assess the explanatory power of both the Machiavellian Intelligence and the Cultural Brain/Intelligence Hypotheses. Children (aged 3–7 years) observed a novel social interaction that provided them with behavioural information that could either be used to outmanoeuvre a partner in subsequent interactions or for cultural learning. The results show that, even after four rounds of repeated interaction and sometimes lower pay-offs, children continued to rely on copying the observed behaviour instead of harnessing the available social information to strategically extract pay-offs (stickers) from their partners. Analyses further reveal that superior mentalizing abilities are associated with more targeted cultural learning – the selective copying of fewer irrelevant actions – while superior generalized cognitive abilities are associated with greater imitation of irrelevant actions. Neither mentalizing capacities nor more general measures of cognition explain children's ability to strategically use social information to maximize pay-offs. These results provide developmental evidence favouring the Cultural Brain/Intelligence Hypothesis over the Machiavellian Intelligence Hypothesis.