Statistical Determinants of Information Value
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The special models in Chapter 5 define problems with particular outcome and or utility functions, assessing and explaining the value of information for all decision problems within that class. Chapters 6 and 7 study the determinants of the value of information in a broader sense than in Chapter 5 by identifying various classes S2 of decision problems D, such that for all D e S2 it can be assured that information value increases or decreases with particular characteristics of D such as environmental riskiness, statistical informativeness, stochastic preference, and initial wealth. Some results hold for very broad classes of decision problems, others hold only for subclasses of DMs such as risk averters, or subclasses of problem structure such as those with utility of outcome functions that are increasing and or convex in particular variables. This chapter focuses on the information structure and the exogenous environment as determinants of information value; Chapter 7 covers the role of the decision maker’s preferences.
KeywordsDecision Rule Prior Distribution Expected Utility Stochastic Dominance Statistical Informativeness
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