Common Knowledge

Rohit Prasad ()
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Rohit Prasad: Management Development Institute Gurugaon, Economics and Public Policy

Chapter 2 in A Case-Based Approach to Game Theory, 2026, pp 29-46 from Springer

Abstract: Abstract This chapter completes the basic structure of game theoretic modelling by introducing the concept of common knowledge—the idea that all players know the rules of the game, know that others know, and so on. The chapter applies this assumption to real-world strategic interactions, including geopolitical signaling, legal reform, and crypto-economics. A new method of solving games, iterative elimination of dominated strategies, is introduced and used to analyse scenarios like India-China conflict, air pollution regulation, and Bitcoin’s power dynamics. The chapter emphasizes how assumptions about knowledge shape strategic outcomes in subtle and powerful ways.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-981-95-4302-1_2

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DOI: 10.1007/978-981-95-4302-1_2

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