Knowing What Others Know: Common Knowledge, Accounting, and Capital Markets

Posted: 18 Dec 2002

See all articles by Shyam Sunder

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

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Abstract

The concept of common knowledge concerning higher orders of knowledge has seen exciting new developments in the fields of philosophy, game theory, statistics, economics and cognitive science in the recent decades. Even though information lies at the heart of accounting and capital markets research, these new developments have remained at the periphery of these fields. Common knowledge thinking may significantly advance our understanding of financial reporting, analysis, securities valuation, managerial control, auditing and information systems. Such accounting and business applications will also make important contributions in the form of concrete, real-life examples and applications to the basic fields where the idea of common knowledge originated. This paper is an overview of common knowledge and its actual and potential applications to accounting and capital markets research.

Keywords: Common Knowledge, Accounting, Capital Markets, Beliefs About Others' Beliefs

JEL Classification: D84, G14, M41

Suggested Citation

Sunder, Shyam, Knowing What Others Know: Common Knowledge, Accounting, and Capital Markets. Accounting Horizons, Vol. 16, No. 4, pp. 305-318, December 2002. Available at SSRN: https://ssrn.com/abstract=364180

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)

HOME PAGE: http://www.som.yale.edu/faculty/sunder/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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