Vague language and context dependence

Abstract

In this paper, we broaden the existing notion of vagueness to account for linguistic ambiguity that results from context-dependent use of language. This broadened notion, termed literal vagueness, necessarily arises in optimal equilibria in many standard conversational situations. In controlled laboratory experiments, we find that, despite the strategic complexity in its usage, people can indeed use literally vague language to effectively transmit information. Based on the theory and the experimental evidence, we conclude that context dependence is an appealing explanation for why language is vague.JEL classification numbersC91, D03, D83.