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Cubitt, Robin P.
Sugden, Robert
Year of Publication: 
Series/Report no.: 
CeDEx Discussion Paper Series 2011-01
The game-theoretic assumption of common knowledge of rationality leads to paradoxes when rationality is represented in a Bayesian framework as cautious expected utility maximisation with independent beliefs (ICEU). We diagnose and resolve these paradoxes by presenting a new class of formal models of players' reasoning, inspired by David Lewis's account of common knowledge, in which the analogue of common knowledge is derivability in common reason. We show that such models can consistently incorporate any of a wide range of standards of decision-theoretic practical rationality. We investigate the implications arising when the standard of decision-theoretic rationality so assumed is ICEU.
common reasoning
common knowledge
common knowledge of rationality
David Lewis
Bayesian models of games
Document Type: 
Working Paper

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