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The Concept was first introduced in the philosophical literature by David Lewis in his study ''Convention'' (1969). It has been first given a mathematical formulation in a Set-theoretical framework by Robert Aumann (1976). Computer Scientists grew an interest in the subject of Epistemic Logic in general--and of common knowledge in particular--starting from the 1980s.


EXAMPLE


It is common to introduce the idea of common knowledge by some variant of the following Logic Puzzle : On an island, there are ''n'' people, of whom ''k'' > 1 have blue eyes, and the rest have green. If a person ever knows herself to have blue eyes, he or she must leave the island at dawn the next day. Each person knows every other's eye color, there are no mirrors, and there is no discussion of eye color. At some point, an outsider comes to the island and makes the following public announcement, heard and understood by all people on the island: "at least one of you has blue eyes". The problem: Assuming all persons on the island are truthful and completely logical, what is the eventual outcome?

The answer is that, on the ''k''th dawn, all the blue-eyed people will leave the island.

This can be easily seen with an inductive argument. If ''k'' = 1, the person will recognize that he or she has blue eyes (by seeing only green eyes in the others) and leave at the first dawn. If ''k'' = 2, no one will leave at the first dawn. The blue-eyed people, recognizing that only one other pair of blue eyes are among the others, ''and'' that no one left on the 1st dawn, will leave. So on, it can be reasoned that no one will leave at the first ''k''-1 dawns if and only if there are at least ''k'' blue-eyed people. Those with blue eyes, seeing ''k''-1 blue-eyed people among the others and knowing there must be at least ''k'', will reason that they have blue eyes and leave.

What's most interesting about this scenario is that, for ''k'' > 1, the outsider is only telling the island citizens what they already know: that there are blue-eyed people among them. However, before this fact is announced, the fact is not ''common knowledge''; it is merely "first-order" knowledge. The notion of ''common knowledge'' therefore has a palpable effect. Knowing that everyone knows does make a difference. When the outsider's public announcment (a fact already known to all) becomes common knowledge, the blue-eyed people on this island eventually deduce their status, and leave.


LOGICAL FORMULATION


Common knowledge can be given a logical definition in Multi-modal Logic systems in which the modal operators are interpreted Epistemically . At the propositional level, such sysems are extensions of Propositional Calculus . The extension consists of the introduction of a group ''G'' of ''agents'', and of ''n'' modal operators ''Ki'' (with ''i = 1,...,n'') with the intended meaning that "agent ''i'' knows." Thus ''Ki arphi'' (where arphi is a formula of the calculus) is read "agent ''i'' knows arphi." We can define an operator ''EG'' with the intended meaning of "everyone in group ''G'' knows" by defining it with the axiom

E arphi \Leftrightarrow \bigwedge_{i \in G} K_i arphi,

By abbreviating the expression E_GE_G^{n-1} arphi with E_G^n arphi and defining E_G^0 arphi = E_G arphi, we could then define common knowledge with the axiom

C arphi \Leftrightarrow \bigwedge_{i = 0}^n E^n arphi with n = 1, 2,...

There is however a complication. The languages of epistemic logic are usually ''finitary'', whereas the Axiom above defines common knowledge as an infinite conjunction of formulas, hence not a well-formed formula of the language. To overcome this difficulty, a ''fixed-point'' definition of common knowledge can be given. Intuitively, common knowledge is thought of as the fixed point of the "equation" E_G ( arphi \wedge E_G arphi). In this way, it is possible to find a formula \psi implying E_G (\psi \wedge E_G arphi) from which, in the limit, we can infer common knowledge of arphi.


APPLICATIONS


Common knowledge was used by David Lewis in his pioneering game-theoretical account of convention. In this sense, common knowledge is a concept still central for linguists and philosophers of language (see Clark 1996) maintaining a Lewisian, conventionalist account of language.

over a certain event, and the Posterior Probabilities are common knowledge, then such posterior probabilities are equal. A result based on the agreement theorem and proven by Milgrom shows that, given certain conditions on market efficiency and information, speculative trade is impossible.

The concept of common knowledge is central in Game Theory . For several years it has been thought that the assuption of common knowledge of rationality for the players in the game was fundamental. It turns out (Aumann and Brandenburger 1995) that, in 2-player games, common knowledge of rationality is not needed as an epistemic condition for Nash Equilibrium Strategies .

Computer scientists use languages incorporating epistemic logics (and common knowledge) to reason about distributed systems. Such systems can be based on logics more complicated that simple propositional epistemic logic, see Wooldridge ''Reasoning about Artificial Agents'', 2000 (in which he uses a first-order logic incorporating epistemic and temporal operators) or van der Hoek et al. "Alternating Time Epistemic Logic".


NOTES