This is implementation of "shannon oracle".

shannon.c   is simple C implementation with fixed depth and breadth.
shannon.cpp is C++ implementation with variable parameters.

Compile one of them (cc shannon.c -o shannon, or c++ shannon.cpp -o shannon), and
start as

$ ./shannon -h # human interaction mode

In default mode (depth=5, breadth=2) shannon oracle can be used as an opponent
the in "heads or tails" game---it shows its guesses and asks for real value
invented by player (relying on latter's fairness, that is). It requires about
100 moves to acquire proficiency and to start winning (unless player use real
coin or other source of random input).

One can use it with bit-stream
(http://www.geocities.com/nikitadanilov/code/bit-stream.c)
to do things like 

wget --passive-ftp ftp://ftp.archive.org/pub/etext/etext03/gbwlc10.txt -O - | \
./bit-stream -D '' | ./shannon -d 25 | ./bit-stream -u

To convert text (The Golden Bowl, by Henry James in this case) into binary
stream, feed it to the shannon oracle and encode output (binary stream again,
consisting of guesses) back into ascii.

I have no references for description of this algorithm; it was implemented
from the memory.

Nikita Danilov. (NikitaDanilov@Yahoo.COM)