How is efficiency defined in decision-making analysis?

In decision-making analysis, efficiency is quantified using the ratio of the Expected Value of Sample Information (EVSI) to the Expected Value of Perfect Information (EVPI), expressed as a percentage. This ratio illustrates how much value the information from a sample adds relative to the maximum value of having perfect information.

In this context, EVPI represents the upper bound of expected value that one could achieve if perfect information were available, while EVSI measures the value added by the information obtained from a given sample. By comparing these two, the efficiency metric effectively indicates how well the actual sample information is utilized relative to the ideal scenario.

This understanding is crucial for decision-makers, as it reveals whether the resources invested in obtaining information yield significant benefits in terms of improved decision quality. A higher percentage indicates that the sample information is valuable and effectively enhances decision-making, while a lower percentage suggests inefficiencies or that the information does not contribute meaningfully to better outcomes.