(3-1) EMV(alternative i)=∑XiP(Xi)
An equation that computes expected monetary value.
(3-2) EVwPI=Σ(Best payoff in state of nature i)× (Probability of state of nature i)
An equation that computes the expected value with perfect information.
(3-3) EVPI=EVwPI−Best EMV
An equation that computes the expected value of perfect information.
(3-4) EVSI=(EV with SI+cost)−(EV without SI)
An equation that computes the expected value (EV) of sample information (SI).
(3-5) Efficiency of sample information=EVSIEVPI100%
An equation that compares sample information to perfect information.
(3-6) P(A|B)=P(B|A)P(A)P(B|A)P(A)+P(B|A')P(A')
Bayes’ Theorem—the conditional probability of event A given that event B has occurred.
(3-7) Utility of other outcome=(p)(1)+(1−p)(0)=p
An equation that determines the utility of an intermediate outcome.
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