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They both look absurd, but never mind.
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But notice that
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Ale doesn't know the color of the hat on his own head.
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So even though both people know,
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even though it is mutual knowledge that
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there's at least one pink hat in the room,
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Ale doesn't know what Kaj is seeing.
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So Ale does not know that Kaj knows that
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there's a pink hat in the room.
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In fact, from Ale's point of view,
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this could be a blue hat.
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So again, they both know that