Chapter 13 - The value of information. Chapter 13 examines the value of acquiring new information about relevant risks before making an important decision and also analyzes the problem of optimal search for the best alternative.
Managerial Economics, 8e William F. Samuelson ● Stephen G. Marks Chapter Thirteen The Value of Information Copyright © 2015 John Wiley & Sons, Inc. All rights reserved The race isn’t always to the fastest nor the battle to the strongest, but that is the way you should bet ~Damon Runyan Copyright © 2015 John Wiley & Sons, Inc. All rights reserved For discussion The Stock Market and the Economy Forecasting the economy is big business Copyright © 2015 John Wiley & Sons, Inc. All rights reserved The Value of Information The Oil Wildcatter Revisited Imperfect Information Copyright © 2015 John Wiley & Sons, Inc. All rights reserved 1.3 Figure 13.1 A Perfect Seismic Test Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 13.2 An Imperfect Seismic Test Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Revising Probabilities Bayes’ Theorem Health Risks from Smoking Valueless Information A New Seismic Test Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Other Applications Predicting Credit Risks Business Behavior and Decision Pitfalls Example 1: Likely Occupations Example 2: 3 Boxes Example 3: Testing for Cancer Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Other Applications The Challenger Disaster and NASA’s Risk Analysis Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 13.3 The Winner’s Curse Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 13.4 Yacht Orders and the Stock Market Copyright © 2015 John Wiley & Sons, Inc. All rights reserved ... Copyright © 2015 John Wiley & Sons, Inc. All rights reserved 1.3 Figure 13. 1 A Perfect Seismic Test Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 13. 2 An Imperfect Seismic Test Copyright © 2015 John Wiley & Sons, Inc. All rights reserved... Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 13. 3 The Winner’s Curse Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 13. 4 Yacht Orders and the Stock Market Copyright © 2015 John Wiley & Sons, Inc. All rights reserved