The expected value of perfect information is the same as the:
A)expected monetary value for the best alternative.
B)expected monetary value for worst alternative.
C)expected opportunity loss for the best alternative.
D)expected opportunity loss for the worst alternative.

Question

Quizplus · Accepted Answer

The expected value of perfect information (EVPI) represents the maximum amount a decision-maker would be willing to pay for having perfect information before making a decision. It is calculated as the difference between the expected payoff with perfect information and the expected payoff under the current state of information. This concept is closely related to the expected opportunity loss for the best alternative, as it quantifies the benefit of making the optimal decision in every state of the world, which is essentially the opportunity lost by not having perfect information.

The Expected Value of Perfect Information Is the Same as The