1

This is a post-first' discussion There are currently 3 threads in this forum. Join the conver...

Question

This is a post-first' discussion There are currently 3 threads in this forum. Join the conver...

This is a post-first discussion There are currently 3 threads in this forum. Join the conver Create Thread FORUM DESCRIPTION
This is a post-first' discussion There are currently 3 threads in this forum. Join the conver Create Thread FORUM DESCRIPTION What are the data or information needed to calculate the Expected Value of Perfect Information (EVPI)? Grading Information

Answers

EXPECTED VALUE OF PERFECT INFORMATION:

In decision theory, the expected value of perfect information (EVPI) is the price that one would be willing to pay in order to gain access to perfect information.A common discipline that uses the EVPI concept is health economics. In that context and when looking at a decision of whether to adopt a new treatment technology, there is always some degree of uncertainty surrounding the decision, because there is always a chance that the decision turns out to be wrong. The expected value of perfect information analysis tries to measure the expected cost of that uncertainty, which “can be interpreted as the expected value of perfect information (EVPI), since perfect information can eliminate the possibility of making the wrong decision” at least from a theoretical perspective.

Equation:

The problem is modeled with a payoff matrix Rij in which the row index i describes a choice that must be made by the player, while the column index j describes a random variable that the player does not yet have knowledge of, that has probability pj of being in state j. If the player is to choose i without knowing the value of j, the best choice is the one that maximizes the expected monetary value:

EMV = max i ∑ j p j R i j {\displaystyle {\mbox{EMV}}=\max _{i}\sum _{j}p_{j}R_{ij}} {\displaystyle {\mbox{EMV}}=\max _{i}\sum _{j}p_{j}R_{ij}}

where

∑ j p j R i j {\displaystyle \sum _{j}p_{j}R_{ij}} {\displaystyle \sum _{j}p_{j}R_{ij}}

is the expected payoff for action i i.e. the expectation value, and

EMV = max i {\displaystyle {\mbox{EMV}}=\max _{i}} {\displaystyle {\mbox{EMV}}=\max _{i}}

is choosing the maximum of these expectations for all available actions. On the other hand, with perfect knowledge of j, the player may choose a value of i that optimizes the expectation for that specific j. Therefore, the expected value given perfect information is

EV | PI = ∑ j p j ( max i R i j ) , {\displaystyle {\mbox{EV}}|{\mbox{PI}}=\sum _{j}p_{j}(\max _{i}R_{ij}),} {\displaystyle {\mbox{EV}}|{\mbox{PI}}=\sum _{j}p_{j}(\max _{i}R_{ij}),}

where p j {\displaystyle p_{j}} p_{j} is the probability that the system is in state j, and R i j {\displaystyle R_{ij}} R_{ij} is the pay-off if one follows action i while the system is in state j. Here ( max i R i j ) , {\displaystyle (\max _{i}R_{ij}),} {\displaystyle (\max _{i}R_{ij}),} indicates the best choice of action i for each state j.

The expected value of perfect information is the difference between these two quantities,

EVPI = EV | PI − EMV . {\displaystyle {\mbox{EVPI}}={\mbox{EV}}|{\mbox{PI}}-{\mbox{EMV}}.} {\displaystyle {\mbox{EVPI}}={\mbox{EV}}|{\mbox{PI}}-{\mbox{EMV}}.}

This difference describes, in expectation, how much larger a value the player can hope to obtain by knowing j and picking the best i for that j, as compared to picking a value of i before j is known. Since EV|PI is necessarily greater than or equal to EMV, EVPI is always non-negative.

EVPI provides a criterion by which to judge ordinary imperfectly informed forecasters. EVPI can be used to reject costly proposals: if one is offered knowledge for a price larger than EVPI, it would be better to refuse the offer. However, it is less helpful when deciding whether to accept a forecasting offer, because one needs to know the quality of the information one is acquiring.

•EVPI measures how much better you could do on this decision if you could always know when each state of nature would occur, where:

–EVUPI = Expected Value Under Perfect Information (also called EVwPI, the EV with perfect information, or EVC, the EV “under certainty”)

–EVUII = Expected Value of the best action with imperfect information (also called EVBest )

–EVPI = EVUPI – EVUII

•EVPI tells you how much you are willing to pay for perfect information (or is the upper limit for what you would pay for additional “imperfect” information!)

NOTE:I've tried my best providing the information requested by you.If you like my work,please leave an up-vote.It is highly appreciated.Thanks in advance.


Similar Solved Questions

1 answers
Discuss the difference between a nursing conceptual model and a nursing theory. Select a nursing theory...
Discuss the difference between a nursing conceptual model and a nursing theory. Select a nursing theory and provide a concise summary of it. Provide an example in nursing practice where the nursing theory you selected would be effective in managing patient care....
1 answers
How does the Electronic Skin Display That can Transmit Data work? what are advantages and disadvantages?...
how does the Electronic Skin Display That can Transmit Data work? what are advantages and disadvantages? whats the history?...
1 answers
Explain what is meant by the term structure of interest rates. Explain the theoretical basis of...
Explain what is meant by the term structure of interest rates. Explain the theoretical basis of an upward-sloping yield curve...
1 answers
Slab of charge. Consider the infinite sheet of charge again but this time suppose the sheet...
Slab of charge. Consider the infinite sheet of charge again but this time suppose the sheet has thickness 2D. Suppose the slab has uniform posi- tive charge-per-volume ρ. (a) What is the field E midway between the two surfaces? (b) Find the field at a point inside the slab a distance a < D fr...
1 answers
A rocket is shot vertically off the ground with an initial velocity of Vo ft/sec. The equation that gives its height s above the ground at time t is: s= s(t) = -16t^2 + Vot What does one do to find time when the rocket reaches its highest point?
A rocket is shot vertically off the ground with an initial velocity of Vo ft/sec. The equation that gives its height s above the ground at time t is: s= s(t) = -16t^2 + Vot What does one do to find time when the rocket reaches its highest point?...
1 answers
Mendand drain which he n dada 14 15 16 17 18 19 14 15 16 17...
mendand drain which he n dada 14 15 16 17 18 19 14 15 16 17 18 19 14 15 16 17 18 19 A) Greatest sample standard deviation: Least sample standard deviation ) B) Greatest sample standard deviation: Least sample standard deviation: () Greatest sample standard deviation (1) Least sample standard deviati...
1 answers
6-a. Prepare an income statement. 6-b. Prepare the statement of retained earnings. 6-c. Prepare the balance...
6-a. Prepare an income statement. 6-b. Prepare the statement of retained earnings. 6-c. Prepare the balance sheet. follows (the amounts are rounded to thousands of dollars to simplify): 7 Account Titles Debit Credit Cash $ 4 Accounts Receivable Supplies 11 Land 0 Equipment 53 Accumulated $ 7 D...
1 answers
Answer all the questions IKEA LEC de 2/18 Attached the Social Web Answer the following questions...
Answer all the questions IKEA LEC de 2/18 Attached the Social Web Answer the following questions 1. Wat you can determinat by doch 2. Three of your common the w a ter for You do some and that one of the young 12 years old working actors w ould you do? production of the carpets ou find they wi...
1 answers
Why did gluten-free diets become so popular? Would you recommend a gluten-free diet? Would you recommend...
Why did gluten-free diets become so popular? Would you recommend a gluten-free diet? Would you recommend white bread, wheat bread, sourdough bread, etc? Support your recommendations with information from both the podcast and our course....
1 answers
YUDHUR VE Your mune system responds to thousands of an ens every day Cite the fact...
YUDHUR VE Your mune system responds to thousands of an ens every day Cite the fact that tim is very heritable more so than breast cancer. There is no evidence t h en get more infections in the period after they are immunced Vaccine ne more pure today than 20 years ago so even though we sve more vacc...
1 answers
Pls give brief answers for both the questions frds I will rate u high frds D...
pls give brief answers for both the questions frds I will rate u high frds D hinat are the souces ot erior in Flot dift rocg gratirg Specbrometer Whot are the sources of eTo n mono chromaber whn wed to tind uave bergths or brigntest 2ines ot giren JONICA...
1 answers
7. Find an equation of the tangent plane to the given parametric surface r(u, v) =...
7. Find an equation of the tangent plane to the given parametric surface r(u, v) = uvi+u sin(n)j + v cos(u)k, at u = 0, v = . 8. Find the area of the part of the surface 2 = 2 + 5x + 2y that lies above the triangle with vertices (0.0), (0,1), and (2,1)....
1 answers
A student collects a sample of gas and finds that 1.01 g of the gas will fill a container with a volume of 0.225 L at STP. What is the molar mass of the gas?
A student collects a sample of gas and finds that 1.01 g of the gas will fill a container with a volume of 0.225 L at STP. What is the molar mass of the gas?...
1 answers
An object is placed 15.0 cm to the left of a convex (converging) lens of focal...
An object is placed 15.0 cm to the left of a convex (converging) lens of focal length 20.0 cm. The image of this object is located (Figure out if the image is real or virtual, it will help to locate the image] O 60.0 cm to the left of the lens. O 60.0 cm to the right of the lens. O 8.57 cm to the ri...
1 answers
Esters of aminoacids are commonly prepared and stored as hydrochloride salts; e.g., alanine methyl ester hydrochloride...
Esters of aminoacids are commonly prepared and stored as hydrochloride salts; e.g., alanine methyl ester hydrochloride (below). One reason is that the electrostatically neutral forms of such esters (“free bases”) tend to turn into compounds called diketopiperazines upon standing. Write a...
1 answers
Determine the point group MICOS M MAYB, octahedral complex, fac isomer (1) В. А M" MA,...
Determine the point group MICOS M MAYB, octahedral complex, fac isomer (1) В. А M" MA, B, octahedral complex, mer isomer...
1 answers
Q.6) Seven wood planks are used to construct a built-up beam shown below. The beam is subjected t...
Q.6) Seven wood planks are used to construct a built-up beam shown below. The beam is subjected to a vertical force of 12 kN, and has an Iz 1.5 x 109 mm The allowable shear force for nails at A and B is 250 N. Determine the maximum spacing for horizontal nails at A and vertical nails at B. 50 300 50...
1 answers
Questions 3-5 correspond with the US Market for Foreign Exchange with Japan, where the price of...
Questions 3-5 correspond with the US Market for Foreign Exchange with Japan, where the price of $ foreign exchange is dollars divided by yen (i.e.), and quantity is the quantity of yen. 3. In the U.S. market for foreign exchange with Japan, how is this market affected by an increase in exports (i.e....
1 answers
Olivera Company provides the following data for the year 2013: Net Sales Revenue: $398,000 Cost of...
Olivera Company provides the following data for the year 2013: Net Sales Revenue: $398,000 Cost of goods sold $255,000 Operating Expenses: $95,000 Income Tax Expense: $9,000 On a vertical analysis, what percentage would be shown for operating expenses? A. 22.9% B. 24.5% C. 23.9% D. 66.4%...

-- 0.011093--