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Suppose you are considering a research study to provide improved information for a decision tree analysis....

Suppose you are considering a research study to provide improved information for a decision tree analysis. The EVPI for the decision tree is $40,000. How does this affect your consideration of the research study cost? Use your own words.
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Answer #1

The expected value of perfect information has significant effect on the conducting of research. Any research that cost below the the expected value of perfect information shall be conducted. However if the the cost of research is higher than the expected value of perfect information then research may not be performed. In the given question the expected value of perfect information is $ 40000. Therefore the research shall be conducted if the total cost is less than $40000.

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