The expected value with perfect information
A) equals EVPI - EMV
B) requires that each decision alternative have a known probability of occurrence
C) is an input into the calculation of the expected value of perfect information
D) is the average of the maximax and the maximin
E) none of the above

Question

Quizplus · Accepted Answer

The expected value with perfect information (EVwPI) is the maximum expected value that can be obtained when full information is available. It is an input into the calculation of the expected value of perfect information (EVPI). EVwPI assumes that each decision alternative has a known probability of occurrence. Therefore, choice B is incorrect. The formula for EVwPI is EVwPI = EMV with perfect information - EMV. Therefore, choice A is incorrect. The average of the maximax and the maximin is known as the Hurwicz criterion, not the EVwPI. Therefore, choice D is incorrect.

The Expected Value with Perfect Information