I know there is a difference between player knowledge and character knowledge. Normally the issue is not wanting to tell the player stuff that their character wouldn't know. However, I think a different problem occurs when the character knows (or should know) something that the player does not.
I really like having dialogue options, especially ones that actually have an impact. The problem I have is I will fret over each and every option everytime there is new dialogue with an NPC. Which is the "right" choice?
I think the main reason for this is there is almost always no background information or nothing to base your decisions on.
Sometimes it's easy, (NPC: "Hi, I am a bandit, give me your money" Me: "No")
Sometimes it's hard, (NPC: "Hi, I am non-famous noble #14, please donate to my worthy charity" Me: "Uhhh, I gave at the office")
Sometimes it's questionable, (NPC: "Hi, good buddy, lend me five bucks" Me: "Do I know you?")
There are so many questions to think about. Having some insight into the person could change your entire perspective of that person.
This is not a complete least but is a decent example of the things I would think about:
Do you know this person?
Have you ever heard of this person (good/bad reputation)?
Is this person famous and thus could be considered "common knowledge"?
Is this person who he/she says they are?
If they are part of an organization, have you heard of it?
My two cents.