166 BASIS APPRAISAL: OBTAINING INFORMATION FROM THE TREE
New for the uncertainty on the compound annual growth rate on Average Selling
Price for all the products. Figure 6–19 shows DiagStatic New for the different
values of the Average Selling Price in DiagStatic New start year, 1003. Figure 6–
20 shows DiagStatic New for the different values of RF fraction of total market
in 2010.
Value of Perfect Information
Besides looking at conditional distributions, we can calculate the value of
perfect information for each uncertainty. If possible information-gathering
efforts have costs comparable to these values, we can formulate the decision
for gathering imperfect information and see if it is worthwhile.
The facilitator rolled back the tree with the chance nodes brought one by one
in front of the decision node and then took the difference between the resulting
expected value and the original expected value to obtain the values of informa-
tion (Figure 6–21).
Peak Market Share for DiagStatic New has the largest value of information,
even more than Technical Success. RF Fraction of Total Market, 2010, has a
larger value of information than one would have expected from Figure 6–20;
although DiagStatic New is not very sensitive to this variable, DiagStatic Plus is
quite sensitive (see the sensitivity bars in Figure 6–12), creating the relatively
large value of information.
The value of perfect information on all uncertainties together is $3.42