Editing Dyadic transformation (section)

==Rate of information loss and sensitive dependence on initial conditions==
One hallmark of chaotic dynamics is the loss of information as simulation occurs. If we start with information on the first ''s'' bits of the initial iterate, then after ''m'' simulated iterations (''m''&nbsp;<&nbsp;''s'') we only have ''s''&nbsp;−&nbsp;''m'' bits of information remaining. Thus we lose information at the exponential rate of one bit per iteration. After ''s'' iterations, our simulation has reached the fixed point zero, regardless of the true iterate values; thus we have suffered a complete loss of information. This illustrates sensitive dependence on initial conditions—the mapping from the truncated initial condition has deviated exponentially from the mapping from the true initial condition. And since our simulation has reached a fixed point, for almost all initial conditions it will not describe the dynamics in the qualitatively correct way as chaotic.

Equivalent to the concept of information loss is the concept of information gain.  In practice some real-world process may generate a sequence of values (''x''<sub>''n''</sub>) over time, but we may only be able to observe these values in truncated form. Suppose for example that ''x''<sub>0</sub> = 0.1001101, but we only observe the truncated value 0.1001.  Our prediction for ''x''<sub>1</sub> is&nbsp;0.001. If we wait until the real-world process has generated the true ''x''<sub>1</sub> value 0.001101, we will be able to observe the truncated value 0.0011, which is more accurate than our predicted value&nbsp;0.001. So we have received an information gain of one bit.