Common Knowledge & Coordination
What everyone knows that everyone knows.
There is a world of difference between everyone knowing a thing and everyone knowing that everyone knows it. That second, recursive kind of knowledge — common knowledge — is what lets a crowd move as one. Why the public signal that makes knowledge common, not the private truth, is what actually moves people.
A whole crowd can privately agree on something — the emperor is naked, the regime is rotten, the bank is shaky — and still not one person moves. Then someone says it out loud, and in a heartbeat the same crowd acts as one. Nothing about the facts changed. What changed is that a private truth became a public one: not just everyone knows, but everyone knows that everyone knows.
That recursive layer has a name — common knowledge — and it is one of the most powerful, least intuitive models in the whole latticework. It is the hidden switch behind bank runs and revolutions, behind why a Super Bowl ad is worth more than the same ad shown privately to the same number of people, and behind why authoritarian regimes fear a public gathering far more than a million private grumbles. This course builds the idea from the ground up — the ladder from private to mutual to common knowledge, the coordination games where beliefs about others’ beliefs pick the outcome, the real-world cascades it explains, and the places where the model is an idealisation that quietly lies to you.
In this topic
- 1 The Switch That Moves Crowds A two-minute orientation to common knowledge and coordination — why a whole crowd can privately agree and still not move, what "everyone knows that everyone knows" adds, and how the course is laid out. 5 min
- 2 The Ladder of Knowledge The three-rung ladder — private, mutual, and common knowledge — that the whole course rests on, and why only the top rung lets people act together on something risky. 12 min
- 3 The Emperor's New Clothes: Public Signals The fact that the emperor is naked is already known to everyone — mutual knowledge. The child's shout makes it common knowledge, and that is what moves the crowd. Why one public signal coordinates a crowd that a thousand private signals never could, plus focal points. 14 min
- 4 Coordination Games: Beliefs About Beliefs Which equilibrium a coordination game lands on is chosen by beliefs about others' beliefs, not payoffs alone — the Stag Hunt, payoff- vs risk-dominance, focal points, and why the good outcome takes common knowledge. 14 min
- 5 Bank Runs, Revolutions & Crowds The real-world faces of common knowledge — why solvent banks collapse in a weekend, why rock-solid dictatorships fall in a week, and why the same ad costs more during the big game. 15 min
- 6 Where Common Knowledge Breaks The pitfalls and limits of the model — why true common knowledge is an idealisation, why coordination stays brittle, how false common knowledge is manufactured, and how the whole course fits the latticework. 14 min
- 7 Final Exam: Common Knowledge & Coordination A graded, one-way final exam on common knowledge and coordination — the ladder from private to common knowledge, public signals and focal points, coordination games and equilibrium selection, bank runs and revolutions, and where the model breaks. Pass mark 70%. 20 min
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