Information and preference reversals in lotteries

Date
2011
Authors
Bakır, N. O.
Klutke, G-A.
Advisor
Instructor
Source Title
European Journal of Operational Research
Print ISSN
0377-2217
Electronic ISSN
1872-6860
Publisher
Elsevier
Volume
210
Issue
3
Pages
752 - 756
Language
English
Type
Article
Journal Title
Journal ISSN
Volume Title
Abstract

Several approaches have been proposed for evaluating information in expected utility theory. Among the most popular approaches are the expected utility increase, the selling price and the buying price. While the expected utility increase and the selling price always agree in ranking information alternatives, Hazen and Sounderpandian [11] have demonstrated that the buying price may not always agree with the other two. That is, in some cases, where the expected utility increase would value information A more highly than information B, the buying price may reverse these preferences. In this paper, we discuss the conditions under which all these approaches agree in a generic decision environment where the decision maker may choose to acquire arbitrary information bundles.

Course
Other identifiers
Book Title
Keywords
Utility theory, Preference reversals, Value of information
Citation
Published Version (Please cite this version)