Modification to the information network

  Briefly explain why the decision problems faced by individuals 1 and 2 are unchanged by this modification to the information network. 2. Individual 3 observes the choices of individual 2, but not the choice of individual 1. What can 3 infer about 2’s color from 2’s choice? 3. Can 3 infer anything about 1’s color from 2’s choice? Explain. 4. What should 3 do if he picks a red ball and he knows that 2 declared Red? What if 3’s picked ball was blue and 2 declared Red? 5. Do you think that a cascade can form in this world? Explain why or why not. A formal proof is not necessary, a brief argument is sufficient.