Using Decision Trees To Teach Value Of Information Concepts
Christopher J. Jablonowski · 2020
Most undergraduate engineering economics textbooks and related curricula include elements of decision analysis, and decision trees are often introduced and promoted as a decision making tool.The teaching of value of information analysis is less prevalent, notwithstanding the variety of potential applications to everyday decisions in engineering practice.This paper addresses this gap by providing a detailed demonstration of how decision trees can be used to value information.It includes a detailed set of decision trees that guide the student through a decision under uncertainty.After definition of a base case, cases are provided for the value of perfect and imperfect information.The value of incremental improvement in information is addressed, and a probabilistic approach is described and demonstrated.The influence of risk preference is also addressed.