zmVault/expected-value-of-perfect-information.md

Expected Value of Perfect Information

In decision-theory, the expected value of perfect information (EVPI) is the price that one would be willing to pay in order to gain access to perfect-information

The perceived value of decreased uncertainty must be weighed against its cost.

This concept provides the basis for the solution of one or more open-problems. 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.