Evpi is always greater than or equal to evsi. True or False
Social Studies · High School · Tue Nov 03 2020
Answered on
True.
The Expected Value of Perfect Information (EVPI) is always greater than or equal to the Expected Value of Sample Information (EVSI).
The reason behind this is that EVPI represents the maximum value that decision-makers would be willing to pay for having perfect information before making a decision. It is calculated by considering the best possible outcome after the perfect information is revealed, minus the expected value of the decision without any additional information.
On the other hand, EVSI represents the value of having some additional, but not perfect, information. This information can improve decision-making but does not guarantee the best possible outcome every time, as it's sample or imperfect information. Thus, EVPI sets the upper limit on the value of information, and EVSI can never exceed this value, making EVPI always greater than or equal to EVSI.