Difference between revisions of "Value of information"
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[[Category:Glossary term]]<section begin=glossary /> | [[Category:Glossary term]]<section begin=glossary /> | ||
:'''Value of information''' (VOI) in decision analysis is the amount a decision maker would be willing to pay for information prior to making a decision.<ref>[[:en:Value of information|Value of information in Wikipedia]]</ref><section end=glossary /> | :'''Value of information''' (VOI) in decision analysis is the amount a decision maker would be willing to pay for information prior to making a decision.<ref>[[:en:Value of information|Value of information in Wikipedia]]</ref><section end=glossary /> | ||
| + | |||
| + | ==Scope== | ||
| + | |||
| + | How can value of information be calculated? | ||
| + | |||
| + | ==Definition== | ||
| + | |||
| + | ===Input=== | ||
| + | |||
| + | To calculate value of information, you need | ||
| + | * a [[Decision variable|decision]] to be made, | ||
| + | * an outcome [[indicator]] to be optimised, | ||
| + | * an optimising function to be used as the criterion for the best decision, | ||
| + | * an uncertain variable of interest (optional, needed only if partial VOI is calculated for the variable) | ||
| + | |||
| + | ===Output=== | ||
| + | |||
| + | Value of information, i.e. the amount of money that the decision-maker is willing, in theory, to pay to obtain a piece of information. | ||
| + | |||
| + | ===Rationale=== | ||
| + | |||
| + | * See [[:en:Decision theory|Decision theory]] and [[:en:Value of information|Value of information]]. | ||
| + | |||
| + | ==Result== | ||
| + | |||
| + | VOI = E(Max(U(d<sub>i</sub>,θ))) - Max(E(U(d<sub>i</sub>,θ))), | ||
| + | |||
| + | where E=expectation over uncertain parameters θ, Max=maximum over decision options i, U=utility of decision d. | ||
| + | |||
| + | ===Management=== | ||
| + | |||
| + | * [[Analytica]] file for [[Image:VOI analysis.ANA|calculating value of information]] | ||
==References== | ==References== | ||
<references/> | <references/> | ||
Revision as of 12:23, 27 January 2009
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- Value of information (VOI) in decision analysis is the amount a decision maker would be willing to pay for information prior to making a decision.[1]<section end=glossary />
Contents
Scope
How can value of information be calculated?
Definition
Input
To calculate value of information, you need
- a decision to be made,
- an outcome indicator to be optimised,
- an optimising function to be used as the criterion for the best decision,
- an uncertain variable of interest (optional, needed only if partial VOI is calculated for the variable)
Output
Value of information, i.e. the amount of money that the decision-maker is willing, in theory, to pay to obtain a piece of information.
Rationale
- See Decision theory and Value of information.
Result
VOI = E(Max(U(di,θ))) - Max(E(U(di,θ))),
where E=expectation over uncertain parameters θ, Max=maximum over decision options i, U=utility of decision d.
Management
- Analytica file for File:VOI analysis.ANA
