Suppose you cannot buy information that completely removes the uncertainty from a business decision that you face, but you could buy information that reduces the degree of uncertainty. Based on the discussion in this chapter, the value of this partial information could be determined as the:
A) expected outcome under complete certainty minus the expected outcome under the partial information case.
B) expected outcome under the partially uncertain case minus the expected outcome under the completely uncertain case.
C) utility of the partially certain case minus the utility of the completely certain case.
D) We cannot determine the value of information under partial certainty.

Question

Quizplus · Accepted Answer

According to the discussion in the chapter, the value of partial information can be determined by comparing the expected outcome under the partially uncertain case (with the information) to the expected outcome under the completely uncertain case (without the information). The difference between the two is the value of the partial information in reducing uncertainty. Therefore, the correct answer is B, which states this comparison.

Suppose You Cannot Buy Information That Completely Removes the Uncertainty