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Vagueness of Language: Indeterminacy under Two-Dimensional State-Uncertainty

Author

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  • Chiba Saori

    (Kyoto University, Graduate School of Economics, Yoshida Honmachi, Sakyo-ku, Kyoto, 606-8501, Japan)

Abstract

We study indeterminacy of indicative meanings (disagreements about meanings of messages among players), a kind of language vagueness examined in Blume and Board (2013. “Language Barriers.” Econometrica 81 (2): 781–812). They, using a cheap talk model in which the state-distribution and the players’ language competence were ex-ante uncertain, demonstrated that this vagueness occurs as an equilibrium language. We expand the work of Blume and Board by using a model between an uninformed decision maker and an informed agent in which the state-distribution and the state are both ex-ante uncertain. We show that this two-dimensional uncertainty also leads to indeterminacy of indicative meanings, that is, to a set of conditions in which an agent with different perceptions of the state-distribution intentionally uses the same symbol for the different extents of information on the state. The vagueness, contrary to common expectations, can actually lead to welfare improvement.

Suggested Citation

  • Chiba Saori, 2020. "Vagueness of Language: Indeterminacy under Two-Dimensional State-Uncertainty," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(1), pages 1-21, January.
    • Handle: RePEc:bpj:bejtec:v:20:y:2020:i:1:p:21:n:11
    DOI: 10.1515/bejte-2018-0093
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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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