Transcript

When the little boy said the Emperor was naked, he wasn't telling them anything they didn't already know, but he added to their knowledge, nonetheless, by blurting out what everyone could see. Within earshot of the others, he ensured that everyone knew that everyone else knew what they knew, that everyone knew that, and so on, and that changed their relationship with the Emperor from obsequious deference to ridicule and scorn.

Hans Christian Andersen's immortal story draws on a momentous logical distinction: private knowledge. I know something, and you know it, with common knowledge. I know that fact and you know it, but in addition, I know that you know it, and you know that I know it, and I know that

you know that I know it, ad infinitum. Of course, the reason that common knowledge is significant is that it is essential for coordination.