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The probability of nontrivial common knowledge

  • Collevecchio, Andrea
  • LiCalzi, Marco

We study the probability that two or more agents can attain common knowledge of nontrivial events when the size of the state space grows large. We adopt the standard epistemic model where the knowledge of an agent is represented by a partition of the state space. Each agent is endowed with a partition generated by a random scheme consistent with his cognitive capacity. Assuming that agentsʼ partitions are independently distributed, we prove that the asymptotic probability of nontrivial common knowledge undergoes a phase transition. Regardless of the number of agents, when their cognitive capacity is sufficiently large, the probability goes to one; and when it is small, it goes to zero. Our proofs rely on a graph-theoretic characterization of common knowledge that has independent interest.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 76 (2012)
Issue (Month): 2 ()
Pages: 556-570

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Handle: RePEc:eee:gamebe:v:76:y:2012:i:2:p:556-570
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. Geanakoplos, John, 1994. "Common knowledge," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 40, pages 1437-1496 Elsevier.
  2. Marco LiCalzi & Oktay Surucu, 2011. "The power of diversity over large solution spaces," Working Papers 1, Department of Management, Università Ca' Foscari Venezia, revised Sep 2011.
  3. Dimitri, Nicola, 1993. "Learning partitions," Economics Letters, Elsevier, vol. 42(2-3), pages 195-199.
  4. Hellman, Ziv & Samet, Dov, 2012. "How common are common priors?," Games and Economic Behavior, Elsevier, vol. 74(2), pages 517-525.
  5. Rinott, Yosef & Scarsini, Marco, 2000. "On the Number of Pure Strategy Nash Equilibria in Random Games," Games and Economic Behavior, Elsevier, vol. 33(2), pages 274-293, November.
  6. John Geanakoplos, 1992. "Common Knowledge," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 53-82, Fall.
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