Common Knowledge

What is common knowledge? Economists tend to talk about "perfect information." It implies that certain information is common knowledge among participants within a certain market transaction. Game theory draws upon the concept of common knowledge in analyzing games with asymmetric information. For a functional, albeit mathematical definition of common knowledge, we turn to logic theory. The basic principle is perhaps confusing at first, but the concept is extremely important in both economics and logic theory.

Below is a comic (courtesy of Nedroid) that demonstrates the concept, though for something to be truly common logic, the process must continue ad infinitum.