The expected value of information that would tell the decision maker exactly which state of nature is going to occur is
A)the expected value of sample information
B)the expected value of perfect information
C)the maximum information
D)the expected value

Question

Quizplus · Accepted Answer

The expected value of perfect information tells us the maximum price a decision maker should be willing to pay to obtain complete knowledge of the state of nature that will occur. This value represents the best possible outcome and helps the decision maker in making an optimal decision. Therefore, option B is the correct answer. Option A refers to the value of additional sample information and is not relevant to this question. Option C, maximum information, is a vague term and not a commonly used concept in decision making. Option D, expected value, is a general term that does not specifically address the value of information in decision making.

The Expected Value of Information That Would Tell the Decision