The expected value of perfect information (EVPI)is always the same as the expected opportunity loss for the best alternative.That is,EVPI = EOL^*.

Question

Quizplus · Accepted Answer

This statement is true. EVPI is the maximum amount that can be paid to obtain perfect information regarding the uncertainty in a decision. On the other hand, EOL is the difference between the expected value of the best decision and the expected value of the decision with incomplete information. Therefore, when perfect information is obtained, the expected opportunity loss is zero, and the expected value of the best alternative is equal to the expected value with perfect information. Hence, the EVPI is always equal to EOL^*.

The Expected Value of Perfect Information (EVPI)is Always the Same