The expected value under conditions of uncertainty subtracted from the expected value under conditions of certainty will result in ________.
A)the value of perfect information
B)an expected opportunity loss
C)an expected monetary value
D)an expected decision strategy

Question

Quizplus · Accepted Answer

The difference between the expected value under conditions of certainty and the expected value under conditions of uncertainty represents the value of perfect information. This is because perfect information would eliminate uncertainty and allow us to make a decision with complete knowledge of the outcome. Subtracting the expected value under uncertainty from the expected value under certainty gives us the maximum amount we are willing to pay for perfect information.

The Expected Value Under Conditions of Uncertainty Subtracted from the Expected