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Can Rationality Be Common Knowledge?Mutual Rationality and Dynamic Communication
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TitleCan Rationality Be Common Knowledge?Mutual Rationality and Dynamic Communication  
AuthorOu Yangkui and Wang Guocheng  
OrganizationChinese Academy of Social Sciences  
Emailwcsoyk@163.com;gcwang@cass.org.cn  
Key WordsSubjective belief; mutual rationality; common knowledge; communication; Nash equilibrium  
AbstractCommon knowledge is a central concept in game theory and economic analysis. However, it has seldom been formalized in Chinese literature. A complete understanding about common knowledge is not only necessary for understanding the basic logic of economic analysis and game solutions, such as Nash equilibrium, but also helpful for clarifying some inappropriate critiques about the hypothesis of rationality. This paper attempts to provide a formal survey on modeling knowledge and also to propose a rational explanation of the usual assumption, i.e., rationality is common knowledge. Furthermore, the dynamic process of communication has also been explored and it shows that any knowledge of anyone is common knowledge under direct communication and Nash equilibrium is natural for this result.  
Serial NumberWP57 
Time2011-02-14 
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