Chapter12 - Chapter 12 Value of Information 1 Chapter 12,...

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1 Chapter 12 Value of Information
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2 Chapter 12, Value of information Learning Objectives: Probability and Perfect Information The Expected Value of Information Expected value of Imperfect Information Value of information in Complex Problems Value of information and Experts
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3 Chapter 12,Value of Information Decision Maker often gather information to reduce uncertainty Information gathering includes: Consulting experts, conducting surveys Performing mathematical or statistical analysis Doing research, or simply reading books, journals, and newspapers.
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4 Value of Information Value of Information: Some Basic Ideas Probability and perfect information Use conditional probabilities and Bayes’ theorem to evaluate information in any decision setting.
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5 Value of Information The Expected Value of Information By considering the expected value, we can decide whether: An expert is worth consulting Whether a test is worth performing Or which of several information sources would be the best to consult.
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The Expected Value of Information The worst possible case: Regardless of the information we hear, we still would make the same choice that we would have made in the first place. In this case, the information has zero
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Chapter12 - Chapter 12 Value of Information 1 Chapter 12,...

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