Value of perfect information, Mathematics

Assignment Help:

Value of perfect information

This relates to the amount that we would pay for an item of information such would enable us to forecast the exact conditions of the market and act accordingly.

The EVPI or expected value of perfect information is the expected outcome along with perfect information minus the expected outcome with no perfect information namely the maximum EMV

Illustration

From above table and described that the probabilities are Boom 0.6, steady state 0.3 and recession 0.1 then

When situations of the market are; boom launch product C: profit = 16

When situations of the market are; steady state launch product B: profit = 6

When situations of the market are; recession launch product B: profit = 12

The expected profit along with perfect information will be

(16 x 0.6) + (6 x 0.3)  + (12 x 0.1) = 12.6

Our expected profit choosing product C is 7

The maximum price that we would pay for perfect information is 12.6 - 7 = 5.6

 


Related Discussions:- Value of perfect information

Find fourier series, Question: Find Fourier series for the periodic fun...

Question: Find Fourier series for the periodic function of period 2 π,defined by      f(x) = x 4 ,  - π ≤ x ≤ π

What are factor trees explain, What are Factor Trees explain? In algebr...

What are Factor Trees explain? In algebra, we often need to factor a number into its prime factors. One way to do this is to use a factor tree. This is a network of numbers, st

I am mathematics expert, i want some assignment for earning i am mathemati...

i want some assignment for earning i am mathematics expert plz provide us mathematics assignment as soon as possible

Integers, The Dolphins football team gained 16 yards on their first play th...

The Dolphins football team gained 16 yards on their first play then lost 11 yards on the next play. Write an addition expression to represent this situation.Find the sum an explain

Theory of equations, If p,q,r are roots of x^3-3x^2+4x-7=0 (p+2)(q+2)(...

If p,q,r are roots of x^3-3x^2+4x-7=0 (p+2)(q+2)(r+2)=

Clique graph, Consider the clique graph below. a) How many subgraph...

Consider the clique graph below. a) How many subgraphs of G with 3 nodes are there?  b) How many of the subgraphs defined in part(a) are induced subgraphs?

Unitary method, who ,why and when discovered unitary method

who ,why and when discovered unitary method

Determine the property of partial ordered relation, Determine the property ...

Determine the property of Partial ordered relation Question: Partial ordered relation is transitive, reflexive and  Answer: antisymmetric

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd