The expected value of perfect information (EVPI):
A)is the same as the expected return with perfect information (ERPI).
B)is never less than the expected value of sample information (EVSI).
C)does not require probabilities in its calculation.
D)requires the availability of sample information.

Question

Quizplus · Accepted Answer

The EVPI is the maximum amount a decision maker would be willing to pay for perfect information about an uncertain event. It represents the difference between the expected payoff under certainty and the expected payoff under risk. Therefore, it is always greater than or equal to the expected value of sample information (EVSI), which is the difference between the expected payoff under certainty and the expected payoff using a specific sample of information. The EVPI does require probabilities in its calculation, but it does not require the availability of sample information.

The Expected Value of Perfect Information (EVPI)