Decision Value & Value-of-Information (VoI) Calculator

{ "Title": "Decision Value & Value-of-Information (VoI) Calculator", "IntroductionHtml": "

Purpose

Use this calculator to focus analytic effort where it will change decisions. Enter payoffs for two alternative actions under two possible states of the world, your current probability estimate, and the estimated cost of an analysis. Two calculation modes are supported: a quick estimate where you provide an estimated expected value after analysis, and a detailed two-outcome scenario where you provide likely analysis outcomes and their probabilities.

Key formulas (manual)

• Expected value (EV) of an action = P(state1) * payoff_if_state1 + (1 - P(state1)) * payoff_if_state2
• Current decision EV = max(EV(action A), EV(action B))
• Value of Information (VoI), quick estimate = Estimated EV after analysis - Current decision EV - Cost of analysis
• Value of (sample) information, detailed = Sum_over_outcomes[P(outcome_i) * EV(best action if outcome_i)] - Current decision EV - Cost of analysis

How to use this form

1. Enter payoffs and your current probability to compute the current decision EV (shown in the example below).
2. Use the quick estimate if you have a solid estimate of the expected improvement an analysis would produce (enter it as “Estimated EV after analysis”).
3. Use the detailed two-outcome mode if you can think of two likely analysis outcomes (for example, the test says “high demand” or “low demand”), estimate their probabilities and the EV you would get under each outcome.
4. If VoI >= cost of analysis (and the result justifies implementation effort and timing), prioritize the analysis; otherwise deprioritize.

Example

Marketing reallocation example (simplified): Action A = keep current spend, Action B = reallocate 20% to channel X. Two states: High response or Low response. Suppose you estimate P(High)=0.4. Action A EV = 0.4*100 + 0.6*80 = 88. Action B EV = 0.4*140 + 0.6*50 = 86. Current decision EV = max(88,86)=88 (choose A).

Quick estimate: you estimate analysis would let you achieve EV=95 on average; cost_of_analysis=3 → VoI = 95 - 88 - 3 = 4 (positive, so analysis is worthwhile).

", "SubmitLabel": "Save Calculation", "SuccessMessage": "Your calculation was saved. The form records inputs so you can compare analyses over time. See the Introduction for manual calculation steps. Future platform enhancements may compute and return results automatically.", "DataType": "DecisionVoICalculation", "SchemaVersion": "1.0", "Fields": [ { "Key": "decision_name", "FieldType": "text", "Label": "Decision name", "HelpText": "Short name for this decision (e.g., Marketing reallocation Q3)", "Required": true, "Placeholder": "Enter a short name" }, { "Key": "decision_description", "FieldType": "textarea", "Label": "Brief description", "HelpText": "Describe the decision, time horizon, and any implementation constraints.", "Required": false, "Placeholder": "Optional background and constraints" }, { "Key": "actionA_label", "FieldType": "text", "Label": "Action A label", "HelpText": "Name of the first action (e.g., Keep current spend)", "Required": true, "Placeholder": "Action A" }, { "Key": "actionA_payoff_state1", "FieldType": "number", "Label": "Action A payoff if State 1", "HelpText": "Enter monetary or utility payoff if State 1 occurs (same units across payoffs).", "Required": true, "Placeholder": "e.g., 100" }, { "Key": "actionA_payoff_state2", "FieldType": "number", "Label": "Action A payoff if State 2", "HelpText": "Enter payoff for Action A in State 2.", "Required": true, "Placeholder": "e.g., 80" }, { "Key": "actionB_label", "FieldType": "text", "Label": "Action B label", "HelpText": "Name of the second action (e.g., Reallocate 20% to channel X)", "Required": true, "Placeholder": "Action B" }, { "Key": "actionB_payoff_state1", "FieldType": "number", "Label": "Action B payoff if State 1", "HelpText": "Enter payoff for Action B when State 1 occurs.", "Required": true, "Placeholder": "e.g., 140" }, { "Key": "actionB_payoff_state2", "FieldType": "number", "Label": "Action B payoff if State 2", "HelpText": "Enter payoff for Action B in State 2.", "Required": true, "Placeholder": "e.g., 50" }, { "Key": "probability_state1", "FieldType": "number", "Label": "Current probability of State 1 (decimal 0–1)", "HelpText": "Enter as a decimal, e.g. 0.4 for 40%. If you prefer percentages, convert to decimals.", "Required": true, "Placeholder": "e.g., 0.4" }, { "Key": "cost_of_analysis", "FieldType": "number", "Label": "Estimated cost of the analysis (same units as payoffs)", "HelpText": "Direct cost plus any expected implementation delay costs you want to include here.", "Required": true, "Placeholder": "e.g., 3" }, { "Key": "quick_estimated_EV_after_analysis", "FieldType": "number", "Label": "Quick-mode: your estimated EV after analysis (before subtracting analysis cost)", "HelpText": "If you already have a credible estimate of the expected EV that analysis would enable, enter it here to compute a quick VoI estimate.", "Required": false, "Placeholder": "Optional: estimated EV after analysis" }, { "Key": "detailed_outcome1_probability", "FieldType": "number", "Label": "Detailed-mode: probability of analysis outcome 1 (decimal 0–1)", "HelpText": "E.g., probability that analysis will indicate 'high demand'. Leave blank if using quick estimate.", "Required": false, "Placeholder": "e.g., 0.45" }, { "Key": "detailed_outcome1_EV", "FieldType": "number", "Label": "If outcome 1 occurs: expected EV of the best action", "HelpText": "The EV you expect to achieve if the analysis returns outcome 1 and you then take the best action for that outcome.", "Required": false, "Placeholder": "e.g., 120" }, { "Key": "detailed_outcome2_probability", "FieldType": "number", "Label": "Detailed-mode: probability of analysis outcome 2 (decimal 0–1)", "HelpText": "Probabilities should sum to ~1 across outcomes; use two outcomes for a simple sample information estimate.", "Required": false, "Placeholder": "e.g., 0.55" }, { "Key": "detailed_outcome2_EV", "FieldType": "number", "Label": "If outcome 2 occurs: expected EV of the best action", "HelpText": "The EV you expect to achieve if the analysis returns outcome 2 and you then take the best action for that outcome.", "Required": false, "Placeholder": "e.g., 70" }, { "Key": "notes", "FieldType": "textarea", "Label": "Notes and assumptions", "HelpText": "Record key assumptions, sources, who provided estimates, and risks or constraints on implementing the chosen action.", "Required": false, "Placeholder": "Assumptions, data sources, stakeholder constraints" }, { "Key": "save_for_deck", "FieldType": "yesno", "Label": "Save this calculation to my deck/library?", "HelpText": "Yes saves the input so you can reference and compare later.", "Required": false } ] }