Introduction

While a reader of this book may be surprised to see a game theorist writing about language, he should instead be surprised by how few game theorists have done so. As Rubinstein observes, language is a game: I make a statement because I believe you will interpret it in a particular way. You interpret my statement based on your beliefs about my intentions. Hence speaker and listener are engaged in a game which determines the meaning of the statement.

Furthermore, I think more “traditional” economists should be interested in models of language. The world people live in is a world of words, not functions, and many real phenomena might be more easily analyzed if we take this into account. For example, consider incomplete contracts. Our models treat contracts as mathematical functions and hence find it difficult to explain why agents might not fully specify the function. Of course, real contracts are written in a language and may not unambiguously define such a function – not its domain or range, much less the function itself.

Rubinstein gives an intriguing opening to this important topic.