If we measure this correlation, then we can say how much of the output variance is attributable to the input
and how much is due to random fluctuations or "noise" introduced by the system during transmission. So
we see that the measure of transmitted information is simply a measure of the input-output correlation.
There are two simple rules to follow. Whenever I refer to "amount of information," you will understand
"variance." And whenever I refer to "amount of transmitted information," you will understand
"covariance" or "correlation."
The situation can be described graphically by two partially overlapping circles. Then the left circle can
be taken to represent the variance of the input, the right circle the variance of the output, and the overlap
the covariance of input and output. I shall speak of the left circle as the amount of input information, the
right circle as the amount of output information, and the overlap as the amount of transmitted
information.
In the experiments on absolute judgment, the observer is considered to be a communication channel.