Unit 9: Value of Information, Video 4: Expected Value of Perfect Information
Richard de Neufville · MIT OpenCourseWare
The idea Perfect information is worth only the improvement over the best decision you can already make.
Why spend the time A raincoat decision tree makes the calculation visible: compare the best choice without a forecast with the best state-dependent choices after a perfect forecast, then subtract. Before buying another test, ask whether even perfect information could justify its cost.
Reservation This is an upper bound, not a promise that a real test is useful. Its probabilities and payoffs must fit the decision; a cost below the bound does not establish value.
Suggested passage: 3:00–7:09