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Value of Information in Conflictual Situations Two Simple Examples

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1 Author(s)
Kan Chen ; Department of Electrical Computer Engineering, College of Engineering, University of Michigan, Ann Arbor, Mich. 48104.

In conflictual situations where two (or more) rational and intelligent players make interdependent decisions to optimize their own payoffs, decisions are often made on the basis of some critical information as well as on what each player anticipates that the other player(s) will do. How much is the critical information worth to a particular player? How much more is the same information worth to the player if he obtains the information covertly without the other player(s) knowing that he has the information? Put in another way, how much should a player be willing to offer as a maximum price to buy the critical information (or for the other player be willing to spend to safeguard the confidentiality of the same information)? How much would one player be willing to spend to find out whether the other player has the information or not? These questions are in the realm of information value theory, which, however, has not been developed in a form to answer these questions related to conflictual situations. The purpose of this paper is to extend information value theory so that such questions can be answered, at least in relatively simple cases.

Published in:

IEEE Transactions on Systems, Man, and Cybernetics  (Volume:SMC-5 ,  Issue: 4 )