On the Implementation of Efficient Communication Patterns in Large Economies.

Abstract

Agents derive benefit from communicating with each other. In order to communicate they need to have a language in common. Learning languages is costly. Our focus is on environments comprising a large number of agents. In this setting we discuss mechanisms that each satisfies three of the following requirements: Assignment Efficiency, Strategy-Proofness, Individual Rationality and Feasibility. We propose three mechanisms. Each of them, although arguably best in its class, comes short of constituting a viable policy recommendation. Nonetheless, we find that there is some room for public intervention when large economies are involved. This crucially relies either on the capacity of the planner to finance language acquisition, or on the fact that all individuals attach a positive value, even if minimal, to the possibility of communicating.

Keywords: linguistic diversity; large economies; benefit of communication; network externalities; strategy-proof

JEL Classification: D60; D71; D82