Concepts of Information Value and Accounting .

Abstract This article develops and applies the concepts of model, action effectiveness and decision value of information in a production decision example. It is argued that a message has several types of potential value and that accounting information should be evaluated according to its learning characteristics in addition to its value in decision. The potential value of information in planning, in control, and in decision making empirically seems to exhibit itself in contributing directly to choice, in improving one's understanding of real-world relationships and in identifying payoff relevant actions. The need to focus on the potential values of information has arisen to counter the decision ethos or advocacy of many information system designers, to explain the role of feedback-oriented information such as many accounting systems, and also to explain several empirical and experimental observations. The concept of information value that derived from and focused upon statistical decision theory has been examined primarily from the standpoint of learning and has been extended to conform to what is argued to be the role of much accounting information. The design of accounting information systems can be expected to benefit to the extent that such concepts improve both our understanding and our methods of estimating the value of information.