An event is considered common knowledge among a group of agents when each player knows the information, each player knows that the other one knows it, and so on. Common knowledge is the limit of a potentially infinite chain of reasoning about knowledge. In this scene from Dodgeball, White Goodman (Ben Stiller) is trying to assert that common knowledge exists between himself and Pete LaFleur (Vince Vaughn).
Ted Lasso – Common Knowledge
Warning: this scene does contain explicit language
In this scene, Beard and Roy are trying to decide how to use their new star player in a match against a former coach from their team, who is familiar with their tactics and players. This creates a common knowledge problem because both Beard and Roy need to make a decision based on what they think the other person knows, what they think the other person thinks they know, and so on.
The problem is that neither Beard nor Roy can be certain about what Nate is thinking or planning, and this uncertainty can make it difficult to make the best decision for the team. In other words, they need to have common knowledge of each other’s intentions and strategies in order to make an informed decision. This common knowledge problem is an example of how information asymmetry can create challenges in decision-making.
The Longest Penalty Shot in the World – Common Knowledge
During the final local league soccer game, the starting goalkeeper is seriously injured and the backup (Fernando) must enter the game to face a final-minute penalty kick. Before the shot can be taken, the crowd storms the field and the referee decides to postpone the kick to one week later. The problem? Fernando has all week to think about where the shooter will kick.
In this scene, the team works through the penalty kick scenario. The options available to the kicker are common knowledge among the team. The team knows the kicker prefers to kick right, so the kicker may kick left instead. But the kicker knows that the team knows that and may kick right after all. The team gets frustrated because they soon realize there is a potentially infinite chain of reasoning about what everyone knows.