On The Economics of Acquiring Information of Imperfect Reliability.

Abstract The article focuses on the importance of information measurement for decision making in corporate. To perform this function effectively, accountants must understand the close bond between information and decision-making, for example, information systems should be subject to much the same type of cost-benefit evaluation as are other segments or aspects of organizational activity. The theoretical basis for such measurements is contained in information economics, a subject of recent vintage closely related to statistical decision theory. It is analyses in article that how reliable the prediction must be before it has some value for the decision-maker, and how its value and the cost of obtaining it can be jointly considered in the attempt to choose the best among several potentially available predictions of different reliability. The illustrative problem is described briefly in the article, which state the objectives of the analysis contained in further argument. The problem is thoroughly discussed with illustrative tables and calculations by the author.