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Lecture VII: Common Knowledge
Markus M. M¨bius o March 4, 2004
This is the one of the two advanced topics (the other is learnin
g) which is not discussed in the two main texts. I tried to make the
lecture notes self-contained. Osborne and Rubinstein, sections 5.1,
5.2,5.4 Today we formally introduce the notion of common knowledge a
nd discuss the assumptions underlying players knowledge in the two
solution concepts we discussed so far - IDSDS and Nash equilibrium.
1
A Model of Knowledge
There is a set of states of nature = { ω1 , ω2 , .., ωn } whic
h
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