Common Knowledge, Regained

Yannai A. Gonczarowski and Yoram Moses

Papers from arXiv.org

Abstract: For common knowledge to arise in dynamic settings, all players must simultaneously come to know it has arisen. Consequently, common knowledge cannot arise in many realistic settings with timing frictions. This counterintuitive observation of Halpern and Moses (1990) was discussed by Arrow et al. (1987) and Aumann (1989), was called a paradox by Morris (2014), and has evaded satisfactory resolution for four decades. We resolve this paradox by proposing a new definition for common knowledge, which coincides with the traditional one in static settings but is more permissive in dynamic settings. Under our definition, common knowledge can arise without simultaneity, particularly in canonical examples of the Haplern-Moses paradox. We demonstrate its usefulness by deriving for it an agreement theorem \`a la Aumann (1976), showing it arises in the setting of Geanakoplos and Polemarchakis (1982) with timing frictions added, and applying it to characterize equilibrium behavior in a dynamic coordination game.

Date: 2023-11, Revised 2024-04
New Economics Papers: this item is included in nep-gth and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2311.04374 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2311.04374

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators (help@arxiv.org).