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Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution

  • Stefano Demichelis
  • Jorgen W. Weibull

Language is a powerful coordination device. We generalize the cheap-talk approach to pre-play communication by way of introducing a meaning correspondence between messages and actions, and by postulating two axioms met by natural languages. Players have a lexicographic preference, second to material payoffs, against deviating from the meaning correspondence. Under two-sided communication in generic and symmetric nxn-coordination games, a Nash equilibrium component in such a lexicographic communication game is evolutionarily stable if and only if it results in the unique Pareto efficient outcome of the underlying game. We extend the analysis to one-sided communication in arbitrary finite two-player games. (JEL C72, C73, Z13)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.98.4.1292
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 98 (2008)
Issue (Month): 4 (September)
Pages: 1292-1311

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Handle: RePEc:aea:aecrev:v:98:y:2008:i:4:p:1292-1311
Note: DOI: 10.1257/aer.98.4.1292
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