Making the trade-off between decision quality and information cost

A growing problem confronting users of remotely sensed. imagery is whether the use of additional or different imagery to improve decision quality is actually justified by its cost. This paper discusses how to compare these competing factors so that an acceptable trade-off may be made between them. The proposed method is based on probabilistic cost-benefit analysis. The concept of "value of information" is introduced in a practical case study using remote sensing to verify farmers' declarations for a crop subsidy program in the European Union. Application of the method requires that (1) the problem at hand can be represented by a decision tree, (2) the desirability of each decision outcome can be expressed numerically, (3) the imagery reveals information about the occurrence of events not under the decision maker's control, and (4), the probabilities of these events and the extent to which they are detectable in remotely sensed imagery can be assessed.