Information Theory

Entropy, mutual information, KL divergence, channel capacity, rate-distortion.
TUTORIALS

Information Theory

Entropy, mutual information, KL divergence, channel capacity, rate-distortion.

Cheap talk and strategic communication

information-theory
cheap-talk
strategic-communication
signalling

The Crawford-Sobel (1982) cheap talk model: how costless, non-verifiable messages can transmit information when preferences are misaligned, with partition equilibria, information loss as a function of bias, and connections to costly signalling games.

May 8, 2026

Entropy and the value of information in strategic games

information-theory
entropy
value-of-information

Apply Shannon entropy to game-theoretic information sets, quantify uncertainty reduction, and compare the value of perfect versus imperfect information using R implementations.

May 8, 2026

Maximum Entropy Correlated Equilibria

information-theory
correlated-equilibrium
entropy

Compute the maximum entropy correlated equilibrium of a game as a constrained optimisation problem in R, comparing it with welfare-maximising CE and analysing mutual information between signals and actions.

May 8, 2026

Rational inattention: information costs and strategic behaviour

information-theory
rational-inattention
bounded-rationality

Model agents who face Shannon mutual information costs for acquiring information about the state, showing how limited attention leads to sticky behaviour, stochastic choice, and deviations from full-information equilibrium.

May 8, 2026

Value of information in strategic games

information-theory
value-of-information
decision-theory
bayesian-games

Compute the value of perfect and imperfect information in decision problems and games, showing that more information always helps a single agent but can hurt in strategic interaction.

May 8, 2026
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