The maximum amount that is worth paying to obtain additional information consists of:
A)the expected price of the information.
B)the difference between the expected value if the information is acquired compared with the expected value with the absence of the information.
C)an amount equal to the most likely benefit that the information will provide.
D)an amount equal to the highest benefit that the information will provide.

Question

Quizplus · Accepted Answer

The maximum amount worth paying for additional information is the difference between the expected value if the information is acquired and the expected value without the information. This is because the additional information can help to increase the expected value of a decision or investment, and the amount worth paying for it should not exceed the potential increase in value. Option A is not complete as it only considers the expected price of information, without taking into account the potential benefits. Option C is also not complete as it only considers the most likely benefit, without taking into account the potential range of benefits. Option D is too high as it considers the highest benefit which may not be realistic or achievable.

The Maximum Amount That Is Worth Paying to Obtain Additional