A Simplified Method for Value of Information Using Constructed Scales

Michael C. Runge (), Clark S. Rushing (), James E. Lyons () and Madeleine A. Rubenstein ()
Additional contact information
Michael C. Runge: U.S. Geological Survey Eastern Ecological Science Center at the Patuxent Research Refuge, Laurel, Maryland 20708
Clark S. Rushing: Warnell School of Forestry and Natural Resources, University of Georgia, Athens, Georgia 30602
James E. Lyons: U.S. Geological Survey Eastern Ecological Science Center at the Patuxent Research Refuge, Laurel, Maryland 20708
Madeleine A. Rubenstein: U.S. Geological Survey, National Climate Adaptation Science Center, Reston, Virginia 20192

Decision Analysis, 2023, vol. 20, issue 3, 220-230

Abstract: The value of information is a central concept in decision analysis, used to quantify how much the expected outcome of a decision would be improved if epistemic uncertainty could be resolved prior to committing to a course of action. One of the challenges, however, in quantitative analysis of the value of information is that the calculations are demanding, especially in requiring predictions of outcomes as a function of alternative actions and sources of uncertainty. However, the concept of value of information is important in early framing of some decisions, before such predictions are available. We propose a novel measure of the value of information based on constructed scales (CVOI), grounded in the algebra of the expected value of perfect information (EVPI), but requiring less of experts and analysts. The CVOI calculation decomposes EVPI into a contribution representing the relevance of the uncertainty to the decision and a contribution representing the magnitude of uncertainty; constructed ratio scales are then proposed for each contribution. We demonstrate the use of CVOI to identify research priorities related to migratory bird management in the face of climate change.

Keywords: expected value of perfect information; epistemic uncertainty; constructed scale; expert judgment; expected value of sample information; qualitative value of information (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://dx.doi.org/10.1287/deca.2023.0474 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ordeca:v:20:y:2023:i:3:p:220-230

Access Statistics for this article

More articles in Decision Analysis from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().