Can Rationality Be Common Knowledge?Mutual Rationality and Dynamic Communication
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| Title | Can Rationality Be Common Knowledge?Mutual Rationality and Dynamic Communication
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| Author | Ou Yangkui and Wang Guocheng |
| Organization | Chinese Academy of Social Sciences |
| Email | wcsoyk@163.com；gcwang@cass.org.cn |
| Key Words | Subjective belief; mutual rationality; common knowledge; communication; Nash equilibrium |
| Abstract | Common 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 Number | WP57 |
| Time | 2011-02-14 |
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