Defined and formalized several decades ago, widely used in philosophy and game theory, the concept of common knowledge is still considered as problematic, although not always for the right reasons. I suggest that the epistemic status of a group of human agents in a state of common knowledge has not been thoroughly analyzed. In particular, every existing account of common knowledge, whether formal or not, is either too strong to fit cognitively limited individuals, or too weak to adequately describe their (...) state. I provide a realistic definition of common knowledge, based on a formalization of David Lewis’ seminal account and show that it is formally equivalent to probabilistic common belief. This leads to a philosophical analysis of common knowledge which answers several common criticisms and sheds light on its nature. (shrink)

Why is common priors are implicit or explicit in the vast majority of the differential information literature in economics and game theory? Why has the economic community been unwilling, in practice, to accept and actually use the idea of truly personal probabilities in much the same way that it did accept the idea of personal utility functions? After all, in, both the utilities and probabilities are derived separately for each decision maker. Why were the utilities accepted as personal, and the (...) probabilities not? (shrink)

This paper investigates the epistemic assumptions that David Lewis makes in his account of social conventions. In particular, I focus on the assumption that the agents have common knowledge of the convention to which they are parties. While evolutionary analyses show that the common knowledge assumption is unnecessary in certain classes of games, Lewis’ original account (and, more recently, Cubitt and Sugden’s reconstruction) stresses the importance of including it in the definition of convention. I discuss arguments pro et contra to (...) argue that, although the assumption might be relevant to a descriptively adequate account of social convention, it is not required for its rational reconstruction. I then point out that Lewis’ account, properly speaking, is of common reason to believe, rather than of common knowledge, and argue that, in order to formalize aptly the distinction between reason to believe and belief, standard formal epistemic models need to be supplemented with so-called awareness structures. Finally, I stress that the notion of knowledge implicit in Lewis’ text involves interesting elements that cannot be captured in the standard propositional formalizations, but need the full expressive force of quantified epistemic logic. (shrink)

David Lewis is widely credited with the first formulation of common knowledge and the first rigorous analysis of convention. However, common knowledge and convention entered mainstream game theory only when they were formulated, later and independently, by other theorists. As a result, some of the most distinctive and valuable features of Lewis' game theory have been overlooked. We re-examine this theory by reconstructing key parts in a more formal way, extending it, and showing how it differs from more recent game (...) theory. In contrast to current theories of common knowledge, Lewis' theory is based on an explicit analysis of the modes of reasoning that are accessible to rational individuals and so can be used to analyse the genesis of common knowledge. Lewis' analysis of convention emphasises the role of inductive reasoning and of salience in the maintenance of conventions over time. Footnotes Earlier versions of this paper were presented at the 13th Amsterdam Colloquium at the University of Amsterdam, at a workshop on social norms at Wissenschaftskolleg zu Berlin, and at seminars at Tilburg University and the University of Bristol. We are grateful for comments from participants at those meetings, from two anonymous referees, and from Michael Bacharach, Nick Bardsley, Cristina Bicchieri, Luc Bovens, Simon Grant, David McCarthy, Shepley Orr, Brian Skyrms, Peter Vanderschraaf, Peter Wakker and Jörgen Weibull. Robert Sugden's work was supported by the Leverhulme Trust. (shrink)

Philosophers using game-theoretical models of human interactions have, I argue, often overestimated what sheer rationality can achieve. (References are made to David Gauthier, David Lewis, and others.) In particular I argue that in coordination problems rational agents will not necessarily reach a unique outcome that is most preferred by all, nor a unique 'coordination equilibrium' (Lewis), nor a unique Nash equilibrium. Nor are things helped by the addition of a successful precedent, or by common knowledge of generally accepted personal principles. (...) Commitments like those generated by agreements may be necessary for rational expectations to arise. Social conventions, construed as group principles (following the analysis in my book On Social Facts), would suffice for this task. (shrink)

One does not simply predict where the other will go, which is wherever the first predicts the second to predict the first to go, and so ad infinitum. Not "What would I do if I were she?" but "What would I do if I were she wondering what she would do if she were wondering what I would do if I were she...?".

Do conventions need to be common knowledge in order to work? David Lewis builds this requirement into his definition of a convention. This paper explores the extent to which his approach finds support in the game theory literature. The knowledge formalism developed by Robert Aumann and others militates against Lewis’s approach, because it shows that it is almost impossible for something to become common knowledge in a large society. On the other hand, Ariel Rubinstein’s Email Game suggests that coordinated action (...) is no less hard for rational players without a common knowledge requirement. But an unnecessary simplifying assumption in the Email Game turns out to be doing all the work, and the current paper concludes that common knowledge is better excluded from a definition of the conventions that we use to regulate our daily lives. (shrink)

The thesis of this essay is that social conventions of the kind Lewis modeled are generated and maintained by a form of practical reasoning which is essentially common. This thesis is defended indirectly by arguing for an interpretation of the role of salience in Lewis’s account of conventions. The remarkable ability of people to identify salient options and appreciate their practical significance in contexts of social interaction, it is argued, is best explained in terms of their exercise of what I (...) call “salience reasoning,” a form of common practical reasoning. The more widely accepted understanding of salience competence, the “natural salience” understanding, fails as an interpretation of the notion at work in Lewis and Schelling (on whom Lewis relied) and is inadequate as an explanation of salience competence. (shrink)

A number of authors, Including Thomas Schelling and David Lewis, have envisaged a model of the generation of action in coordination problems in which salience plays a crucial role. Empirical studies suggest that human subjects are likely to try for the salient combination of actions, a tendency leading to fortunate results. Does rationality dictate that one aim at the salient combination? Some have thought so, Thus proclaiming that salience is all that is needed to resolve coordination problems for agents who (...) are rational in the sense of game theory. I argue against this position; rational agents will not necessarily aim for the salient. It remains to explain how the salient comes to be chosen by human beings. Various possibilities are noted. One involves a mechanism invoked by Hume and Wittgenstein in other contexts: we may project an unreasoned compulsion onto reason, falsely believing that rationality dictates our choice of the salient. (shrink)

When social scientists began employing evolutionary game theory (EGT) in their disciplines, the question arose what the appropriate interpretation of the formal EGT framework would be. Social scientists have given different answer, of which I distinguish three basic kinds. I then proceed to uncover the conceptual tension between the formal framework of EGT, its application in the social sciences, and these three interpretations. First, I argue that EGT under the biological interpretation has a limited application in the social sciences, chiefly (...) because strategy replication often cannot be sensibly interpreted as strategy bearer reproduction in this domain. Second, I show that alternative replication mechanisms imply interpersonal comparability of strategy payoffs. Giving a meaningful interpretation to such comparisons is not an easy task for many social situations, and thus limits the applicability of EGT in this domain. Third, I argue that giving a new interpretation both to strategy replication and selection solves the issue of interpersonal comparability, but at the costs of making the new interpretation incompatible with natural selection interpretations of EGT. To the extent that social scientists seek such a natural selection interpretation, they face a dilemma: either face the challenge that interpersonal comparisons pose, or give up on the natural selection interpretation. By identifying these tensions, my analysis pleas for greater awareness of the specific purposes of EGT modelling in the social sciences, and for greater sensitivity to the underlying microstructure on which the evolutionary dynamics and other EGT solution concepts supervene. (shrink)

There are two general classes of social conventions: conventions of coordination, and conventions of partial conflict. In coordination problems, the interests of the agents coincide, while in partial conflict problems, some agents stand to gain only if other agents unilaterally make certain sacrifices. Lewis' (1969) pathbreaking analysis of convention in terms of game theory focuses on coordination problems, and cannot accommodate partial conflict problems. In this paper, I propose a new game-theoretic definition of convention which generalizes previous game-theoretic definitions (Lewis (...) 1969, Vanderschraaf 1995), and which can be used to characterize norms of justice in partial conflict situations. I argue that the key structural property necessary for a social arrangement to be a convention is that it be conditionally self-enforcing, in the sense that: (i) each agent has a decisive reason to follow her end of the arrangement given that she expects all to do likewise, (ii) given a different set of expectations, some agents would have had a decisive reason to deviate, and (iii) these facts are common knowledge. This leads to a definition of convention as a strict correlated equilibrium (Aumann 1974) together with appropriate common knowledge conditions. Examples are given in which it is shown how this more general account of convention can be used to analyze norms of justice as well as coordination problems. It is only a general sense of common interest; which sense all the members of the society express to one another, and which induces them to regulate their conduct by certain rules. I observe, that it will be for my interest to leave another in the possession of his goods, provided he will act in the same manner with regard to me. He is sensible of a like interest in the regulation of his conduct. When this common sense of interest is mutually express'd, and is known to both, it produces a suitable resolution and behavior. And this may properly be call'd a convention or agreement betwixt us,.. (shrink)

Economic theories of team reasoning build on the assumption that agents can sometimes behave according to beliefs or preferences attributed to a group or a team. In this paper, I propose a different framework to introduce collective intentionality into game theory. I build on John Searle’s account, which makes collective intentionality constitutive of institutional facts. I show that as soon as one accepts that institutions are required to solve indetermination problems in a game, it is necessary to assume a form (...) of collective intentionality that comes from what I call a common understanding of the situation among the players. This common understanding embodies the epistemic requirements for an institution to be a correlated equilibrium in a game. As a consequence, I question recent claims made by some economists according to which game-theoretic accounts of institutions do not need to assume collective intentionality. (shrink)