186
12.2.
20
10
5
0
0.1
0.2
0.6
0.1
A
B
6
A = 20
0.1
A = 10
0.2
A = 5
0.6
A = 0
0.1
20
6
A
B
10
6
A
B
5
6
A
B
0
6
A
B
Perfect
Information
EMV(A) = 7.00
EMV(B) = 6.00
EMV(Info) = 8.20
EVPI = EMV(Info) - EMV(A) = 8.20 - 7.00 = 1.20.
This decision tree model is saved in the Excel file
“Problem 12.2.xls”.
12.3.
EVPI = 0 because one would still choose A regardless of A’s outcome. To state it slightly differently,
no matter what you found out about A’s outcome, your decision would still be the same: Choose A.
Because the information cannot change the decision, the expected value of the information equals zero.

This
** preview**
has intentionally

**sections.**

*blurred***to view the full version.**

*Sign up*