Hat:
Cast on 60 stitches.
Place 20 stitches each on needles 1, 2, & 3.

Work in k2 p2 rib for 2 1/2 inches (or as long as desired).

After ribbing knit as follows:
Row 1:*k3 main color, k2 alternate color* repeat to end of round
Row 2:k1 alternate color, *k3 main color, k2 alt color* repeat from * to last four stitches k3 main color, k1 alternate
Row 3:*k2 alt color, k3 main color* repeat to end of round
Row 4:k1 main color *k2 alt color, k3 main color* repeat from * to last 4 stitches, k2 alt color, k2 main color
Row 5:k2 main color *k2 alt color, k3 main color* repeat from * to last 3 stitches, k2 alt color, k1 main color

Repeat these 5 rows for 2 1/2 inches

Continue in main color only for decrease as follows, knitting all even rounds:
Decrease Round 1:*k1, k2tog, k7* repeat to end of round
Decrease Round 3:*k2tog, k1* repeat to end of round
Decrease Round 5:repeat round 3
Decrease Round 7:*k2tog, k2* repeat to end of round
Decrease Round 9:*k2tog* repeat to end of round (ending with 9 stitches total)

FINISHING:

Cut tail of yarn and run on needle through remaining 9 stitches. Pull tight to close. Thread needle through to inside and tie off. Weave in all ends.

I topped this hat with a pom-pom made from the same two colors, but it would be cute without as well.