ASSESSING THE VALUE OF INFORMATION: PROBLEMS AND APPROACHES

Abstract

Several approaches to assessing the value of information are reviewed and their usability is discussed. The first approach is that used by economists, where the value of information is reflected through market prices and changes in probabilities. It is claimed that the applicability of this approach to information systems (IS) is limited. The second approach is based on measuring the quantity of information and then assigning value to quantity. An example of this approach is the entropy function. It is explained why the use of this method is limited to cases where data capacity or probability changes are the only issues to be considered. Three other approaches that are more useful to IS are discussed: the nonnative value, the realistic value, and the perceived value. These values are explained and discussed through a review of theoretical studies, real-life cases, and empirical research. The concluding section provides a comparative discussion of the various information values, and suggests the conditions to which each is best suited.

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