The Value of Sequential Information

Abstract

In decision analysis, it is customary to think of the value of a piece of information as being a fixed amount against which the cost of learning the information should be compared. One should refuse to pay for the information if its cost exceeds its value. Otherwise one can expect to gain, in some statistical sense, by paying for the information. It is possible to extend this simple idea by incorporating the concepts of risk preference, utility functions, and imperfect information. However the basic concept remains the same. In principle a fixed maximum price can be determined that should be paid for a piece of information. One may then use this quantity, which is called the value of the information, to decide whether or not to buy the information.

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Document Details

Document Type
Technical Report
Publication Date
Jan 31, 1974
Accession Number
AD0776609

Entities

People

  • Allen C. Miller Iii

Organizations

  • Stanford University

Tags

DTIC Thesaurus Topics

  • Computer Programs
  • Contracts
  • Delphi Method
  • Economic Systems
  • Engineering
  • Governments
  • Intervals
  • Iterations
  • Military Research
  • Notation
  • Probability
  • Probability Density Functions
  • Production
  • Psychology
  • Random Variables
  • Two Dimensional
  • Weather Forecasting

Readers

  • Government Contracting/Procurement.
  • Team-Based Human-Centered Cognitive Task Decision Making and Information Performance.