RISK AND THE VALUE OF INFORMATION IN IRREVERSIBLE DECISIONS
- Cite this article as:
- Gersbach, H. Theory and Decision (1997) 42: 37. doi:10.1023/A:1004911026088
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The analysis of the nexus between the value of information and risk is examined for sequential decisions with different degrees of future commitment, as e.g. environmental decisions. We find that in the linear case a riskier environment in general will increase the value of information. This result will be extended in the separable case to decreasing and increasing stochastic returns to scale. An example shows the ambiguity in the general case.