vault backup: 2025-07-28 17:12:58

uncertainty.md

@@ -1,14 +1,57 @@
 ---
 id: uncertainty
 aliases: []
-tags: 
+tags:
   - risk
 ---
 # Uncertainty
 
 The term "uncertainty" refers to the possibility of multiple outcomes.
 
-## Aleatory Uncertainty
+## Information
+
+In statistical inference and [[strategy]],
+**information** is the resolution of uncertainty.
+
+### Value of Information
+
+> [!quote]
+> **Value of information** (VOI or VoI)
+> is the amount a decision maker would be willing to pay
+> for information prior to making a decision.
+
+It is the value of the reduction in uncertainty
+that the information provides.
+
+### Expected Value of Perfect Information
+
+Expected value of perfect information (EVPI)
+is the price that one would be willing to pay
+in order to gain access to perfect information.
+
+> [!info] Perfect Information
+> Perfect information is hypothetical information
+> that would eliminate all uncertainty.
+
+The perceived _value_ of decreased uncertainty
+must be weighed against its _cost_.
+
+#### In Construction Estimating
+
+This concept provides the basis for the solution
+of one or more [[open-problems-in-estimating]].
+To reduce [[risk]] in [[construction-estimating]],
+an organization pays in estimator hours.
+These hours have a direct cost in salary and benefits,
+however the greater cost is the opportunity cost
+of tying up an estimator who could otherwise be starting a new project.
+
+In many cases, the utility of doubled throughput
+far outweighs the increased risk of individual bids.
+
+## Types of Uncertainty
+
+### Aleatory Uncertainty
 
 > [!info] Also Known As
 > * statistical uncertainty
@@ -17,10 +60,11 @@ The term "uncertainty" refers to the possibility of multiple outcomes.
 
 Aleatory uncertainty is inherent randomness in data that can't be explained away.
 
-## Epistemic Uncertainty
+### Epistemic Uncertainty
 
 > [!info] Also Known As
 > * systematic uncertainty
 > * model uncertainty
 
-Epistemic uncertainty is that which arises from a lack of knowledge.
+Epistemic uncertainty is that which arises from a lack of knowledge,
+and can be eliminated with access to [[#information]].