Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?
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Notes -
The concept often comes up in the context of dictatorships, so that's the context I'll use to illustrate it.
Alice, Bob and Carol live in the Soviet Union during Stalin's regime. Alice hates Stalin and wishes him dead. But Alice has never read a column or editorial which was even mildly critical of Stalin (Stalin controls Pravda), and also knows that everyone who criticises Stalin in any capacity immediately vanishes to the gulag, never to be heard from again. For fear of this happening to her, Alice never criticises Stalin in front of Bob and Carol. Unbeknownst to Alice, Bob and Carol also hate Stalin, but have performed exactly the same risk calculus and decided never to publicly criticise Stalin. Hence conversations between Alice, Bob and Carol consist of three people loudly, conspicuously praising Stalin and successfully deceiving the others that they sincerely admire Stalin and think he's the bee's knees - but all three of them hate him and erroneously believe that they're the only one of the three to think so.
There's a sophomoric theory of how dictatorships come to an end: "people admired Stalin, but then a critical mass of people turned against him and the public rose up to overthrow him". The toy example above illustrates why this theory is wrong: a critical mass of people hating the dictator is necessary but not sufficient to effect an overthrow of the dictatorship. It's perfectly possible for a simple or supermajority of the population to hate the dictator, but for the dictator to remain in power if enough of the people who hate him erroneously believe that their opinion is a minority or fringe opinion. It's not enough for Alice, Bob etc. to hate Stalin: Alice must also know that Bob hates Stalin, and Bob likewise - Stalin must be widely despised, and it must be common knowledge that Stalin is widely despised.
This much makes sense to me, but beyond this it gets tough for me. This sounds like "everyone knows Stalin sucks, but everyone doesn't know that everyone knows Stalin sucks". But let's say everyone did know that everyone knows Stalin sucks. Why is that not common knowledge already? Why is it important that everyone knows that everyone knows that everyone knows that Stalin sucks?
I think the answer is roughly the same as that to my favorite riddle: https://xkcd.com/blue_eyes.html
So I'm a few days late, but I'm struggling with the riddle. I can't get it to work out in my head.
The note provides the inductive base case.
(blue, brown, note falls from the sky saying someone has blue eyes)
(1, 0, False): No information on their eyes. They never leave.
(1, 0, True): No one else could possibly have blue eyes. They leave on day 1.
(1, 1, False): Same as (1, 0, False). No one leaves.
(1, n, False): Same as (1, n-1, False). No on leaves.
(2, 0, True): On day 1, each reasons that if they are brown in (1, 1, True), the other person will leave. The other person doesn't leave. They each leave on day 2.
(n, 0, True): On day n-1, each reasons that if they are brown in (n-1, 0, True), the other n-1 people will leave on day n-1. This doesn't happen. All n people leave on day n.
(2, 0, False): On day 1, each reasons that whether they are blue or brown in (1, 1, False), the other person will never leave. The other person does not leave. This gives no information. No one ever leaves.
Etc
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To throw another explanation into the arena: Alice, Bob and Carol currently hate Stalin but each thinks they are alone, so they don't rebel. If Alice found a credible note saying "Bob hates Stalin. Carol hates Stalin." Then she has learned a little, but her options don't increase all that much.
Anyways, the above bullet points are just Alice's thought process. In reality, Bob also got a note saying "Alice hates Stalin. Carol hates Stalin." And Carol also got a similar note. The problem, hopefully you see, is that the notes are secret.
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Because without that, Alice, Bob and Carol are individually carrying out a risk calculus under the assumption that each of them is the only one who hates Stalin. If you hate Stalin and everybody else loves him, the expected payoff for publicly criticising him is that you are shipped off to the gulag. Thus everyone in the society is incentivised not to criticise Stalin, and he remains in power.
But when it becomes common knowledge, the payoff matrix changes: if I hate Stalin and I know that everybody else does too, the expected payoff for publicly criticising him is that it creates a chain reaction culminating in Stalin being forced out. Common knowledge that Stalin is widely despised is the only thing that can incentivise a self-interested agent in the system (an agent concerned with self-preservation) to act to change the system from within.
The scenario I'm describing above is a pretty quintessential Moloch trap. From outside the system, it's obvious that it's in Alice, Bob and Carol's best interest to rise up and overthrow Stalin. From within the system, none of them have any good reason to believe that attempting to overthrow Stalin would end in any other way than being immediately shipped off to the gulag or executed; hence, they all keep their heads down and the system endures.
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L1: Everyone knows Stalin sucks. But they don't know that everyone knows this, so they don't think a rebellion could succeed.
L2: Everyone knows that everyone knows Stalin sucks. But they don't know that everyone knows this, so for all they know everyone else is on L1 and doesn't think a rebellion could succeed, so people expect other people to steer clear of a rebellion due to erroneously not thinking it could succeed, causing it to fail.
L3: Everyone knows that everyone knows that everyone knows Stalin sucks. But they don't know that everyone knows that, so for all they know everyone else is on L2 and expects rebellions to fail, so people expect other people to steer clear of a rebellion due to erroneously thinking that others will steer clear of it due to erroneously not thinking it could succeed, causing it to fail.
Etcetera.
On the other hand, L∞: A trusted newspaper says that everyone agrees Stalin sucks. Now there's no even hypothetical-within-a-hypothetical possibility that somebody might think a rebellion has no chance.
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Well typically in most dictatorships there is a cohort of between ten and seventy percent of the population that genuinely do support the regime for ideological or materialistic reasons. And those people are usually the ones holding the guns. Stalin is actually kind of an outlier in the ratio of sheer fear to genuine support. Also, you don’t have to be a genuine hardline supporter of the regime to rat somebody else out to save yourself.
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