Operations research
Kid → expert
EVPI Explained at 3 Levels
Explain perfect information to a 5-year-old, a student and a professor
Quick check · tap an answer to continue
Lesson notes
Key points
- If a friend tells you tomorrow's weather, you know whether to carry an umbrella, and that tip is worth something.
- EVPI is the most you should pay for a perfect forecast: expected value with perfect information minus the best EMV.
- EVPI equals the minimum expected opportunity loss, so real imperfect surveys are always worth less than it.
Definitions
- EVPI
- Expected value with perfect information minus best EMV without it; an upper limit on what any forecast is worth.
Takeaway: Never pay more for information than EVPI.
Quick check: If EVwPI is 90 and the best EMV is 70, what is EVPI?
- 160
- 20
- 70
EVPI = 90 − 70 = 20.
A useful tipEVPIEVPI = min EOL
Lessons like this, for your syllabus.
Short narrated study videos written for your course, level and exam. Free to start.
Get lessons for your own syllabus