Hypothetical knowledge and counterfactual reasoning

Samet introduced a notion of hypothetical knowledge and showed how it could be used to capture the type of counterfactual reasoning necessary to force the backwards induction solution in a game of perfect information. He argu ed that while hypothetical knowledge and the extended information structure s used to model it bear some resemblance to the way philosophers have used conditional logic to model counterfactuals, hypothetical knowledge cannot b e reduced to conditional logic together with epistemic logic. Here it is sh own that in fact hypothetical knowledge can be captured using the standard counterfactual operator ">" and the knowledge operator "K", provided that s ome assumptions are made regarding the interaction between the two. It is a rgued, however, that these assumptions are unreasonable in general, as are the axioms that follow from them. Some implications for game theory are dis cussed.