This is a fascinating topic! I wonder though if Richard is right, whether the issue is not (just) common knowledge. It's confusing, because the usual way of ensuring that something is common knowledge is for someone to state it publicly. However it can be argued that this does more than merely making it common knowledge, in that it is a provocative action which demands a response.
In particular, in situations where there is a known but unacknowledged fact, is that fact actually common knowledge, or not? Everyone knows the fact, and everyone knows that everyone else knows the fact, but is there some point in the recursion where knowledge peters out? Would it be false that everyone knows that everyone knows that everyone knows that everyone knows the fact? Is there a "doubt amplification" effect where even the smallest doubt that everyone else really does know the fact, gets amplified as we proceed down the recursive chain, until when we go deep enough, we really don't know whether everyone else knows they all know it, to the nth degree?
Or OTOH would it be more correct to say that everyone knows that everyone knows... as far as you want to go, that the fact is truly common knowledge, yet it is still unacknowledged. And then as Richard quotes from Nagel, the problem is taking the next step and discussing it openly.
Followup to: Belief in Belief
One of those insights that made me sit upright and say "Aha!" From The Uncredible Hallq:
The power of real deception - outright lies - is easy for even us nerds to understand.
The notion of a lie that the other person knows is a lie, seems very odd at first. Up until I read the Hallq's explanation of Pinker, I had thought in terms of people suppressing uncomfortable thoughts: "If it isn't said out loud, I don't have to deal with it."
Like the friends of a terminal patient, whose disease has progressed to a stage that - if you look it up online - turns out to be nearly universally fatal. So the friends gather around, and wish the patient best hopes for their medical treatment. No one says, "Well, we all know you're going to die; and now it's too late for you to get life insurance and sign up for cryonics. I hope it isn't too painful; let me know if you want me to smuggle you a heroin overdose."
So even that is possible for a nerd to understand - in terms of, as Vassar puts it, thinking of non-nerds as defective nerds...
But the notion of a lie that the other person knows is a lie, but they aren't sure that you know they know it's a lie, and so the social situation occupies a different state from common knowledge...
I think that's the closest I've ever seen life get to imitating a Raymond Smullyan logic puzzle.
Added: Richard quotes Nagel on a further purpose of mutual hypocrisy: preventing an issue from rising to the level where it must be publicly acknowledged and dealt with, because common ground on that issue is not easily available.