[Music]

[Applause]

Well, hello everyone.

This is very exciting. Um, Steven's book

is all about uh common knowledge. It's

called When Everyone Knows That Everyone

Knows. dot dot dot. all about all kinds

of things, but including things like how

people coordinate on making sure they're

all kind of dressed appropriately in a

way that matches, uh, which we we

immediately failed to do. Um,

I I should say I'm I looking forward to

this evening, but I'm also uh I I view

it with some trepidation. The uh the

first time that Stephen and I were in a

room together was at a conference about

um about political violence. I seem to

remember. And uh Steven was amazing. And

uh at the end of the conference, there

was a conference dinner and the host of

the conference dinner took time to

explain how unhelpful he had found my

contribution. Um

that was the first time we were in a

room together. The last time we we

interacted, it was for a BBC radio

program. Um, Stephen had uh me and uh

the much missed investor Charlie Munger

uh talk about cognitive errors that we

had made. Charlie Munger told a little

story about a mistake he had made. I I

told a little story about a mistake I'd

made at which point Charlie Munger, who

I think was about 98 at the time, hooted

with laughter and said, "That is the

dumbest thing I have ever heard in my

life. I thought mine was stupid, but

that you you really must be an idiot."

So, um, anyway, so what I'm saying is

third time lucky. Uh, the bar has been

set low.

I I expect Steven to be excellent, but

who knows

what idiocies I'm going to commit over

the next uh hour and a and a hour and a

quarter. Hour and a quarter. Yes. Hour

and six minutes. Now, uh if I don't keep

if I keep talking like this, the um the

format is that I'm going to uh ask

Stephen questions about his wonderful

book for about 4550 minutes and then uh

you are going to send in questions uh

via this magic iPad in front of me uh

and I will put your questions uh to

Stephen and u most importantly at the

end of the evening uh Stephen in the uh

foyer out there is going to be signing

books for I think probably for every

single one of you. Um, he never gets

tired. He's indeathicable. He loves

signing books. So, please, um, make your

requests as complicated as you like.

Personalizations, poems, everything. Um,

he he loves that. So,

I'm having too much fun already. I

should probably let Steven say

something. Stephen. Um the so this is a

book about many things but in particular

it's a book about uh what is quite a

formal concept uh common knowledge

and I I wanted to start because no one

can escape now for the next hour and a

half. Um I wanted to start by exploring

the formal concept before we uh go

through all the interesting

ramifications

and you have I think the most elegant

illustration of a famous logic puzzle

the spinach problem. So may can we start

with the spinach problem and and um I'm

sure everyone in the audience will be

able to solve it.

>> This has been called the world's hardest

logic problem and it has uh it goes back

to the early 1950s. It comes in various

versions, some of them not safe for work

by 21st century standards. Sometimes

called the muddy children problem, the

barbecue sauce problem. My version is uh

the spinach and teeth problem. So

there's an academic dinner, a bunch of

psychologists

at a banquet. They serve um halalibet

with sauteed spinach. And so there's a

hazard that you might get a a bit of

spinach in your teeth. It's mortifying

if it happens to you, but there are no

mirrors around. Uh everyone is too

polite to tell anyone else that they

have spinach in their teeth, and no one

wants to uh pick their teeth if they're

in fact clean.

So, the department chair can't stand it

any longer. Uh, there are three people

with spinach in their teeth. She gets up

and she says, "Uh, at least at least one

of you has spinach in their teeth. When

I clink the glass, that would be a good

time to remove it." So, she clinks the

glass and no one moves. She clings the

glass a second time and no one moves.

She clinks the glass a third time and

the three diners with spinach in their

teeth all remove the spinach. The

question is how do they know it was

them? That's that that's the problem.

>> Any anybody want to

>> I said it was too early for audience

participation.

>> There will be I will be asking questions

later by the way. Um so ex ex how how

does this puzzle resolve itself?

>> By the way I could have made it that

there were um seven diners with spinach

in their teeth and on the seventh clink

of the glass everyone cleans their teeth

by the same logic. speak up.

>> Oh,

>> I will do that. Is this better?

>> Okay. So, um, imagine this simple case

where there's just one diner with with

spinach in his teeth. Then the when the

chairman says, "At least one of you have

spinach in your teeth," uh, and and

clinks the glass, everyone looks around.

Um the person with spinaches teeth sees

that everyone else's teeth is

clean knows that he has to be the one.

So that's easy. Now imagine there are

two people. The uh again department

chair clinks the glass. People look

around. Now at this point um no one can

know that it's them. They do see uh

everyone sees um the person with spinach

in his teeth sees one other person with

spinach in her teeth. But uh since all

the department chair said was that at

least one of you, he can't know that she

whether she's the only one or uh he also

has spinach in her teeth. However, she

did not remove her spinach at the clink

of the glass. That means it couldn't

have been that that she must have seen

someone else with spinach in his teeth

and so it must be him. So on the second

clink of the glass both of them clean

their teeth because she has gone through

the same uh coitation.

Now you can see that this logic can be

extended to any number of people with

spinach in their teeth after the

corresponding number of clinks and it

but it crucially depends on the

announcement being public. common

knowledge in the technical sense that

not only does everyone know it, but

everyone knows that everyone knows it.

And it is only the fact that the

announcement was public that could

allows you to deduce what the other

person uh didn't do uh and therefore

what the other person must have seen. If

for example the department chair had

slipped a note to everyone or whispered

in everyone's ear that at least person

one person has spinach in their teeth,

uh it wouldn't work. you couldn't come

to the same deduction. So it's a a

puzzle that depends on the concept of

common knowledge which sounds rather uh

obstruuse everyone knowing that everyone

knows that everyone knows something but

it's one of many examples perhaps the

the the most fish in which it actually

plays a role in our uh social lives.

>> So I I love the explanation of the

puzzle. I mean, they all these various

ones with people with blue eyes and with

black hats. And I mean, I'm I'm addicted

to logic puzzles. So, I' I've seen

versions of this puzzle uh over and over

again over the years. And I and I I

think this the spinach and the clinking

of the glass is is perfect. Um but it's

it's weird, right? This is a weird

puzzle.

>> This is a weird No one actually behaves

like this. No one actually thinks, "Oh,

everyone knows that. everyone knows that

everyone that you know no one goes oh

Steven knows that I know that Steven

knows that I know that Steven knows that

I know it's what the dot dot dot on the

cover of the book is for

>> which I had to fight for

>> yeah which well rightly so because

otherwise otherwise it's just talking

about one level of mutual knowledge

that's that's not the same thing at all

um but this is this is kind of this is

an odd kind of niche and so economists

like me who found out that you were

writing a talk about common knowledge,

we all have the same reaction, I think,

which is basically common knowledge is a

weird thing about kind of knowledge

partitions and odd logic puzzles and

strange corners of game theory and it's

all very cute if you like that sort of

thing, but it has no wider application

whatsoever. Um, reading the book, which

is a wonderful book, which you will all

enjoy, I realized that there's all the

applications in the world. So, so what

was the point at which you you got hold

of this

this sort of strange kind of infinite

regress of mental reasoning and realized

that there was something much broader

there. I came to it through my interest

in language. Um it enters into an

understanding of language at the

simplest level at um what language is

and how it works and even how a word

works. A word is a convention. Uh, a

rose by any other name would smell just

as sweet. But it the sound rose works as

a way of evoking the concept rose

because every English speaker tacitly

knows that that sound goes with that

meaning. But more important, they know

that everyone else knows it and everyone

else knows that everyone else knows it.

And so you can use it indiscriminately

throughout the community of English

speakers and even kids are sensitive to

that when they learn uh words. if they

hear a word say from their mother, they

just assume that's that that's English.

I can use it with anyone else. I can use

it with third parties. They don't stop

to think, well, that's what what mom

calls it. Maybe dad calls it something

different. So, it's necessary to get

language going. Um, and and some of the

philosophical work in common knowledge

originated by trying to understand

conventions such as every word in a

language. But it enters into it in a

more subtle way in the phenomenon of

indirect speech. What linguist sometimes

call implicature and that it refers to

the fact that we often don't uh say what

we mean and don't mean what what we say.

Uh it's if you simply took the meaning

of every word in a sentence and the way

the grammatical rules combine them and

then you kind deduce who did what to

whom from what's the subject and what's

the verb. you'd still be clueless as to

very often as to what the person

actually is trying to convey. Such as if

you could pass the salt, that would be

awesome. Okay? Now, if you parse that,

you're not going to get what everyone

understands the the meaning to be in

context. And that's one of the reasons

that it took so long to get computers to

understand language if they simply crank

through an algorithm of deducing the

meaning of a sentence from the

arrangement of words. Then if you ask

the computer, can you um tell me the um

the the cheapest airfare from London to

New York? It would answer, yes, I can

tell you the cheapest airfare from

London to New York. But it's kind of

missing the point that this is actually

a request. It's not a uh a uh assessment

of the uh the the algorithm's

capabilities. I mean, let's let's unpack

for a second the meaning, the literal

meaning of if you could pass me the

salt, that would be awesome. Literally,

what does that mean?

>> Literally, it's a it's a hypothetical.

You're musing on on on possible worlds.

Um, it's also hyperbolic. It surely

wouldn't be worthy of awe if the if the

salt was passed.

>> Yes.

>> U, but we effortlessly in context

understand that it is a request. We also

understand that it's a polite request.

That is presumably the reason that you

go through these this this this

indirection is that you don't want to be

barking commands at someone who is not

your servant like treating them as if

they were a servant. So there's

something polite, respectful. You're

maintaining a social relationship.

also counting on the ability of your

hearer to catch your drift, read between

the lines to figure why would that

person be musing on this hypothetical.

Well, if if the person were would not be

pleased to get the salt, then they

wouldn't be asking to pass the salt. The

fact that they say that they would be

pleased. Uh the only way to make sense

of that in context is that that they

want the salt. So there that's a a

phenomenal linguist studied for decades

with not much attention to why we go

through the bother. Why don't we just

blurt it out? And there are many other

examples of indirect speech. And I

devoted a chapter in a previous book,

the the stuff of thought, language is a

window into human nature to puzzle

puzzle out why so much of of our uh

language is roundabout. It's uh we use

we shilly shalley. we use weasel words

uh instead of just you know kind of

cutting the crap and saying what we

mean.

>> I mean there is a can I kind of

interject with a specific example here.

So just before we came on about half an

hour before we came on stage Stephen um

one of the organizers wonderful people

from how to academy thank you very much

how to academy for uh arranging this

evening. One of the one of the

organizers from how to academy said uh

would you like me to get you a coffee?

Uh and and I and I said um no I don't

want a coffee. Thank you. Uh, it keeps

me awake. And then I immediately thought

of George Costanza from Seinfeld. This

famous scene in Seinfeld where George

Costanza's he's been out on a date and

it's gone quite well. And at the end of

the date, the lady he's been uh uh spent

the evening with says, "Would you like

to come up for coffee?" And George says,

"Um, no, thank you. Um, I can't drink

coffee late at night. It keeps me

awake."

She

seems slightly annoyed. It's all a bit

awkward. She leaves. He drives off. And

then immediat and then and the next

morning he's talking to he's talking to

his friends and he's like, "Coffee

doesn't mean coffee. Coffee means sex."

And but then his his friend's like, "No,

no, George. Sometimes coffee just does

mean coffee." He's like, "No, coffee

doesn't." And but so the question is, is

it true that coffee does sometimes mean

coffee? Why didn't she say, "Would you

like to come up to my place for sex?" If

if that that is in fact what she wanted,

why did so why didn't she say that?

>> Yes. Um the

>> Well, I I have I I have studied this

problem.

>> We're not one of we're not talking about

soul now. Come on.

>> The uh and it's one of many examples

where in socially fraught situations, we

don't blurt out what what we mean. So a

a sexual comment is is an example. the

polite request, a veiled bribe. If you

were going into a restaurant and did not

have a reservation and it occurred to

you that perhaps you could slip a 20

note to the major D in exchange for

jumping the queue and being seated

immediately, uh, you probably wouldn't

say, uh, if I give you 20, would you

seat me right away? And we know that

this is true because this is actually

tried as a it was an assignment that an

editor of a food magazine gave to a

writer who dared him to do it in the

fanciest restaurants in Manhattan on a

Saturday night and write up his

experience for the the magazine. Well,

his first reaction was that this was as

he took the taxi uh on on the way to the

the first uh assignment. For one thing,

he was filled with with apprehension and

dread. He kept imagining the uh the

angry retorts of some insensed matraee

like how dare you insult me or do you

think you can get in with that or what

kind of establishment do you think this

is? That was what was running through

his mind. That was the terror if he just

blurted it out. And so instead he used

innuendos, weasel words. He said um he

first of all he would hold the note out

of in peripheral vision and say to the

major de I was wondering if you might

have a cancellation or is there any way

to shorten my weight or this is a really

important night for me by the way it

worked every time. So you now know that

at least in New York 100% of major G's

are bribable. But what was he so afraid

of? Uh and there are other examples. A

veiled threat is also usually issued

indirectly. I I reproduce a scene from

the Sopranos in which a member the

member of the family approaches a high

school acquaintance uh pays for his

candy at the checkout counter and he

says, "Danny, great to see you. I hear

you're on the jury of the Soprano trial.

It's an important civic responsibility

that we should all take part in. You've

got a wife and kids. We know you'll do

the right thing, which everyone

recognizes as a veiled threat.

So, what's going on? Uh what is the

difference between a an obvious innuendo

and the humor in the Seinfeld episode is

that in that case it did go over his

head, but most grown people know when

they're being propositioned even

indirectly. So isn't so much that there

is plausible deniability stanza

notwithstanding, but there's plausible

deniability of common knowledge. I

suggested that the difference between an

innuendo, even an obvious innuendo, and

blurting it out is that blurting it out

generates common knowledge. Which is to

say, let's say um uh we'll flip it.

Let's say uh George says to his date,

"Uh, do you want to uh come up for

coffee?" and she says no. Uh, well, you

know, she knows that she's turned down a

sexual overture and and he knows it. But

does she know that he knows? She could

still think to herself, well, maybe he

thinks I'm naive. Maybe he thinks I just

uh turned down invitation to coffee. And

he could think, well, maybe she thinks

I'm dense. So, there's no common

knowledge, the higher order knowledge

about the knowledge. And crucially that

allows them to return to their platonic

relationship or their supervisor

supervise relationship some relationship

other than a sexual relationship which

is a to use some jargon a different

coordination game. Yeah.

>> So the idea is that social relationships

are coordination dilemmas. Two people

are friends or lovers or a um

um a dominant and a subordinate. If each

one knows that the other one knows that

they are uh common knowledge can um

upend that common understanding and so

we avoid the common knowledge that

speech ordinarily generates by using

innuendo and euphemism.