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The Concept of Value of Information

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The Concept of Value of Information
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H IMPACT O F ; INFORMATION ON DECISIONS: E /COMMAND ~ld-CONTROL SYSTEM EVALUATION
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by

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Marvin S. Cohen, and Anthony N.S. Freeling

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Sponsored by Defense Advanced Research Projects Agency Under Contract M D A 9 0 3 - 8 0 - C - 0 1 9 4 DARPA Order No. 3 8 3 1

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Under Subcontract from Decisions and Designs, Inc.

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Februarv 198 1 .

THE VIEWS AND CONCLUSIONS CONTAINED IN THIS DOCUMENT ARE THOSE OF THE AUTHOR AND SHOULD NOT BE INTERPRETED AS NECESSARILY REPRESENTING THE OFFICIAL POLICIES. EITHER EXPRESSED OR IMPLIED, OF THE DEFENSE ADVANCED RESEARCH PROJECTS AGENCY OR THE UNITED STATES GOVERNMENT.

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DECISION SCIENCE CONSORTIUM, INC.

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7700 Leesburg Pike, Suite 421 Falls.@hurch,-Virginia 22043(703) ---- 10 -- ---- --- -790-05 - --

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SUMMARY

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In work reported here, Decision Science Consortium, Inc. (DSC) has examined the application of the decision analytic concept of value of information to the design of information systems. Automated data base systems play an increasingly prominent role in a variety of areas - including Command, Control, Communications, 3 and Intelligence (C I), Indications and Warning (I & W), and business management. However, a basic problem of data base design has not been solved: what information should be included in the system, and what subset of that information should be presented to a user, so as to best achieve the objectives of the relevant organization? A common characteristic of systems in current use is that they often provide vast quantities of partially relevant data, while failing to identify the information which the decision maker actually needs to solve his problem. Current evaluation techniques for information systems appear to bypass this problem altogether. Evaluation in terms of dataprocessing parameters, like channel

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