da2 - Engineering Risk Benefit Analysis 1.155, 2.943,...

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DA 2. The Value of Perfect Information 1 Engineering Risk Benefit Analysis 1.155, 2.943, 3.577, 6.938, 10.816, 13.621, 16.862, 22.82, ESD.72, ESD.721 DA 2. The Value of Perfect Information George E. Apostolakis Massachusetts Institute of Technology Spring 2007
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DA 2. The Value of Perfect Information 2 Recall the evaluation of the survey results (Slide 14, DA 1): Strong P(s/L 2 ) = 0.8 P(s/L 3 ) = 0.2 P(s/L 4 ) = 0.0 Mild P(m/L 2 ) = 0.2 P(m/L 3 ) = 0.6 P(m/L 4 ) = 0.3 Weak P(w/L 2 ) = 0.0 P(w/L 3 ) = 0.2 P(w/L 4 ) = 0.7 1.0 1.0 1.0
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DA 2. The Value of Perfect Information 3 Perfect Information (Clairvoyant) A clairvoyant, CV, is always correct , i.e., P[CV says L 2 /L 2 materializes] = 1.0 = P[s/L 2 ] P[CV says L 3 /L 2 materializes] = 0.0 = P[m/L 2 ] P[CV says L 4 /L 2 materializes] = 0.0 = P[w/L 2 ] Receiving the CV’s report removes all uncertainty.
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DA 2. The Value of Perfect Information 4 Calculations for “survey result is s” or “survey says L 2 ” (Slide 18, DA 1) Payoff Prior Likelihood Product Posterior
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da2 - Engineering Risk Benefit Analysis 1.155, 2.943,...

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