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Common Knowledge and Interactive Behaviors: A Survey

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  • Frederic KOESSLER

Abstract

This paper surveys the notion of common knowledge taken from game theory and computer science. It studies and illustrates more generally the effects of interactive knowledge in economic and social problems. First of all, common knowledge is shown to be a central concept and often a necessary condition for coordination, equilibrium achievement, agreement, and consensus. We present how common knowledge can be practically generated, for example, by particular advertisements or leadership. Secondly, we prove that common knowledge can be harmful, essentially in various cooperation and negotiation problems, and more generally when there are con icts of interest. Finally, in some asymmetric relationships, common knowledge is shown to be preferable for some players, but not for all. The ambiguous welfare effects of higher-order knowledge on interactive behaviors leads us to analyze the role of decentralized communication in order to deal with dynamic or endogenous information structures.

Suggested Citation

  • Frederic KOESSLER, 2000. "Common Knowledge and Interactive Behaviors: A Survey," Working Papers of BETA 2000-07, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2000-07
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    File URL: http://beta.u-strasbg.fr/WP/2000/2000-07.pdf
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    References listed on IDEAS

    as
    1. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January.
    2. Aumann, Robert J., 1995. "Backward induction and common knowledge of rationality," Games and Economic Behavior, Elsevier, vol. 8(1), pages 6-19.
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    Cited by:

    1. Pierre Courtois & Tarik Tazdaït, 2021. "Jacques Lacan and game theory: an early contribution to common knowledge reasoning," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 28(5), pages 844-869, September.
    2. Julien Pénin, 2007. "Open Knowledge Disclosure: An Overview Of The Evidence And Economic Motivations," Journal of Economic Surveys, Wiley Blackwell, vol. 21(2), pages 326-347, April.
    3. K. de Jaegher, 2009. "All-purpose minimal sufficient networks in the threshold game," Working Papers 09-07, Utrecht School of Economics.
    4. repec:use:tkiwps:3131 is not listed on IDEAS

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    More about this item

    Keywords

    Interactive knowledge; common knowledge; information structure; communication.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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