Bray Theory Workshop

This paper re-examines a model of Cremer, Garicano, and Pratt that characterizes efficient languages.  It studies organizations in which participants have common preferences but communication is costly.  In this model, efficient languages use words to describe similar information, but need not use precise words for frequent events and vague words for unusual ones. The model identifies a source of communication failure across units.  It provides an argument for giving the best-informed agents decision-making authority.