Assignment:
There are two players, N = {I, II}, and two states of nature S = {s1, s2}. A chance move chooses the state of nature, where s1 is chosen with probability 0.4, and s2 is chosen with probability 0.6. Player I knows the true state of nature that has been chosen. A chance move selects a signal that is received by Player II. The signal depends on the state of nature, as follows: if the true state of nature is s1, Player II receives signal R with probability 0.6, and signal L with probability 0.4; if the true state of nature is s2, Player II receives signal M with probability 0.7, and signal L with probability 0.3. It follows that if Player II receives signal L, he does not know with certainty which state of nature has been chosen. If the state of nature that has been chosen is s2, and Player II has received signal M, then Player I is informed of this with probability 0.2, and Player I is not informed of this with probability 0.8. This description is common belief among the players. Construct a belief space in which the described situation is represented by a state of the world and indicate that state.
Provide complete and step by step solution for the question and show calculations and use formulas.