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This chapter explains how game theory treats problems of knowledge and information. The knowledge and possibility operators are defined and related to the idea of an information set in games. The idea of perfect recall is introduced and shown to imply that mixed strategies can be simplified to behavioral strategies. The subject of common knowledge is discussed at length, including Aumann's result on when players may agree to disagree. The chapter ends with a discussion of David Lewis's claim that common knowledge is necessary for coordinated action, in which an alternative analysis of Rubinstein's Email Game is offered.

Ch. 1 shows the reader how to model asymmetric information and knowledge in theoretical economics. It also introduces the concept of higher‐order knowledge. For the analysis of bubbles it is important to draw a distinction between mutual knowledge, e.g. all traders know that the price is too high, and common knowledge, i.e. they all know this and that all know and so on. Prices are determined in equilibrium. The two most commonly used equilibrium concepts in market settings with asymmetric information are the competitive Rational Expectations Equilibrium (REE) concept and the strategic Bayesian Nash Equilibrium concept. The chapter compares and contrasts both equilibrium concepts and also highlights their conceptual problems. This chapter also introduces and contrasts the two efficiency concepts: informational efficiency and allocative efficiency.

Grand-style Neo-Griceanism is the attempt to provide a Gricean reduction of public meaning to speaker meaning and speaker meaning, in turn, to the non-semantic propositional attitudes of speakers. This chapter rehearses and amplifies the various ways this program fails, showing how these failures are due to a misconstrual of speaker-hearer experience of language: that speakers experience public meaning as entirely independent of anyone’s non-semantic propositional attitudes; but as well, that speaker meaning is perceived as “primitive”—independent of any other propositional attitudes that a speaker may entertain while speaker-meaning a particular content. It is also shown that the subdoxastic processes in speaker-hearers that support language-transactions make impossible the various attempts to ground public meaning in mutually-recognized conventions.

Ryle poses a dilemma for prospective self-knowers according to which the knowing self’s own operation precludes its turning its activity upon itself. If Ryle is right, then, unfortunately, we must despair in the face of the Socratic invocation of the Delphic injunction: “Know yourself.” Socrates admonishes (γνῶθι σεαυτόν; v. Chrm. 164d; Prt. 343b; Phdr. 229e; Phlb. 48c; Laws 2.923a; I Alc. 124a, 129a, 132c). Perhaps we would like to follow his admonition: but how? Aristotle proposes a way forward, deriving from a surprising source, namely the forms of mutual knowledge and mutual perception requisite for social living, and so for human flourishing.