A one-shot buyer-seller game assumes common knowledge of everyone’s payoffs

Evidence

Thus the customer prefers buying a good car to not buying a car at all, and he prefers this in turn to buying a ‘lemon’. (This is reflected in the hypothesis that 1—8 > 0 > — 8.) I now assume that these four pay-off values, —8, 1—(, 7, and a, are common knowledge. … I begin by considering a ‘dishonest’ salesman, I formalize his disposition by the hypothesis that y exceeds a. To have an interesting problem I assume further that a is positive, that is y > a > 0. In other words, the salesman would choose to sell the customer a lemon rather than a reliable car, but he would choose the latter option over not selling a car at all. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 892

Categorization

• DEFINE: Common knowledge of payoff structure and honesty as a dispositional parameter are the modeling groundwork.