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Re: cost / benefit analysis

Posted by alexandra_k on February 9, 2005, at 21:49:31

In reply to Re: unblocked - Thank you for that (nm) » Dr. Bob, posted by AuntieMel on February 9, 2005, at 12:39:12

Potential actions are evaluated as justified or not in terms of their costs and benefits, where these indicate values, positive or negative, that need not be measurable monetarily (that is they may be moral or aesthetic values, or some other for which the question of price may be inapplicable).

Expected value

Let O1, O2... be the possible outcomes of an action A; let V(O) be the value (cost or benefit) of each outcome O, and let P(O) be the probability of each outcome (given that action A was performed). Then the *expected value* of an action A is:

[ P(O1) X V(O1) ] + [ P(O2) X V(O2) ] + ...

Hmm. I guess thats ok as far as it goes
But as is typically the case it remains silent on what interests us the most
(ie how to comparatively weight the values of the outcomes...)

 

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URL: http://www.dr-bob.org/babble/admin/20050128/msgs/455712.html