Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 255: Efficient communication, common knowledge, and consensus

Elias Tsakas () and Mark Voorneveld ()
Additional contact information
Elias Tsakas: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG
Mark Voorneveld: Tilburg University, Department of Econometrics and Operations Research, The Netherlands

Abstract: We study a model of pairwise communication in a finite population of Bayesian agents. We show that, in contrast with claims to the contrary in the existing literature, communication under a fair protocol may not lead to common knowledge of signals. We prove that commonly known signals are achieved if the individuals convey, in addition to their own message, the information about every individual’s most recent signal they are aware of. If the signal is a posterior probability about some event, common knowledge implies consensus.

Keywords: Private information; communication; common knowledge; consensus

JEL-codes: D82; D89

15 pages, June 18, 2007

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