Question

The expected value of perfect information: is a hypothetical value that is impossible to calculate accurately...

The expected value of perfect information:

is a hypothetical value that is impossible to calculate accurately

is the maximum amount the decision maker would expect to pay for information related to future states of nature

is the internal rate of return

equals the maximum monetary value of a decision

Math   Statistics-And-Probability   
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Homework Answers

Answer #1

We know that,

The Expected Value of Perfect Information (EVPI)
= the upper limit of what you would pay for any supplemental information
that is certain (perfect)
It is calculated before you actually acquire the new information
(“preposterior” analysis).

Hence,

The correct answer is,

The expected value of perfect information is the maximum amount the decision maker would expect to pay for information related to future states of nature.

i.e., Second Option is correct.

Thank you.

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