Question: Exercise 9 (information cascades, 2 pts). In this problem we consider the herding experiment and the information cascades model from EK, Chapter 16. Suppose that

Exercise 9 (information cascades, 2 pts). In this problem we consider the herding experiment and the information cascades model from EK, Chapter 16. Suppose that

the majority-red urn contains 7 red balls and 3 blue balls; the majority-blue urn contains 8 blue balls and 2 red balls.

The experimenter picked one of the two urns at random. The first two students made identical decisions, which initiated an information cascade. If the picked urn is majority-red, what is the probability that the cascade is wrong?

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