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American Economic Review: Vol. 98 No. 4 (September 2008)

AER Volume. 98, Issue 4 | Previous ArticleNext Article

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

Article Citation

Demichelis, Stefano, and Jorgen W. Weibull. 2008. "Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution." American Economic Review, 98(4): 1292-1311.

DOI: 10.1257/aer.98.4.1292

Abstract

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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Authors

Demichelis, Stefano (U Pavia)
Weibull, Jorgen W. (Stockholm School of Economics)

JEL Classifications

C72: Noncooperative Games
C73: Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Z13: Economic Sociology; Economic Anthropology