Fundamental assumptions Game-theoretic analysis is built on 2 fundamental assumptions 1. rationality: players are interested in maximizing their payoffs 2. common knowledge: all players know the structure of the game and that their opponents are rational, that all players know that all players know the structure of the game and that their opponents are rational, and so onFundamental assumptions • Game-theoretic analysis is built on 2 fundamental assumptions: • 1. rationality: players are interested in maximizing their payoffs. • 2. common knowledge: all players know the structure of the game and that their opponents are rational, that all players know that all players know the structure of the game and that their opponents are rational, and so on