EVPI Calculator

Calculate EVPI



Formula

The formula to calculate the Expected Value of Perfect Information (EVPI) is:

\[ EVPI = EUM - EMV \]

Where:

What is EVPI?

EVPI, or Expected Value of Perfect Information, is a concept in decision theory that calculates the maximum amount a decision-maker would be willing to pay for additional information before making a decision. It is the difference between the expected payoff with perfect information and the expected payoff under the current information. Essentially, it quantifies the value of having complete and perfect information when making a decision.

Example Calculation

Let's assume the following values:

Using the formula to calculate the EVPI:

\[ EVPI = EUM - EMV = 100 - 80 = 20 \]

The Expected Value of Perfect Information (EVPI) is 20.