Game Theory & Decision

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Value of Perfect Information

How much better decisions become with full information.

Formula

VPI = EV_{info} - EV_{no\,info}

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Variables

VPIValue of information

EV_{info}EV knowing the outcome

EV_{no\,info}EV without it

Example

VPI caps what you should pay for research or a forecast.

Did You Know?

VPI sets a rational ceiling on consulting fees — never pay more for data than the better decisions are worth.

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More in Game Theory & Decision

Expected Value

Probability-weighted average outcome of a decision.

Kelly Criterion

Optimal fraction of bankroll to bet for long-run growth.

Expected Utility

Weighted average of the utility of outcomes, not just their cash value.

Payoff Comparison

One strategy dominates another if its payoff is always higher.

Minimax Value

Best worst-case payoff a player can guarantee.

Mixed Strategy (Indifference)

Probability that makes an opponent indifferent between their options.