Value of information

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<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.<section end=glossary />

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, Value of information, and Expected value of perfect information.

Result

Procedure

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 calculating value of information

How to use the method

Value of information score

The VOI score is the current expected value of perfect information (EVPI) for that variable in an assessment where it is used. If the variable is used is several assessments, it it the sum of EVPIs across all assessments.