On the function of language

This paper demonstrates how to extend a standard model of strategic communication to distinguish between referential messages that identify states and conative messages that describe actions. It assumes that there are messages that have conventional meanings and makes different assumptions about the connection between these conventional meanings and preferences. With conventional meaning and connections, differences between messages that describe states and messages that describe actions may arise in equilibrium. The nature of the relationships depends on the structure of the strategic interaction (common- versus opposed-interests). Costly lying leads to the use of referential messages in games where players have common objectives but to the use of conative messages in games where players have opposed objectives. When interests are common, players use and interpret conventional messages in the conventional way. When interests are opposed, typically there will not be an equilibrium in which players always use and interpret conventional messages in the conventional way.