Optimal Relevance in Imperfect Information Games

I analyze how natural language transmits information about intended actions. This work on imperfect information games complements work on incomplete information games where natural language transmits information about a sender’s type. Unlike solution concepts based on Nash equilibria, the solution concept first takes into account that a message’s literal meaning conveys common understandings, incorporating the semantic feature that only a shared natural language is comprehensible. Second, the equilibrium meaning, which has to do with the actual use of language in a specific game, depends on the strategic context. This setup can be interpreted as a formal pragmatics where the credibility of the message depends on the sender’s incentives to be truthful. Words are not proof of what they state, so mistrust equilibria are always possible. In trust equilibria, the sender aims at optimal relevance.