Pragmatic Information - Mark Burgin
It is a chapter from the book The theory of information, published in 2009 by Mark
Burgin where he gives a scientific and mathematical approach to the theory of
information.
In this chapter he talks about pragmatic Information, an approach that considers
information as something that can change the structure and the behaviour of systems.
In particular, Burgin studies the role of information in the process of decision-
making.
Example: if we are a brand that sells beauty products and we want to improve our
packaging we have to make a research about our costumers to understand if their
have any particular needs about packaging, we collect information, we extract the
useful pieces of information, we elaborate them and then we establish a strategy (take
decisions) on the basis of our research and information. So we won’t use all the
information but only the information that has a particular value for us, that will add
something to our main mission that is improving our packaging.
Economics approach of information value
1.Jacob Marshak has an economics approach on pragmatic information:
-Information value (demand price for Marshak): represents how much a brand is
willing to pay in order to obtain new information, which depends on the advantages
that it will take. So, can information help you to take better decisions/have higher
incomes/develop better strategies?
-Information cost (supply price for Marshak): price required by the supplier of
the information, which may be low but never inferior to the cost it pays for the
production and the distribution of information. A supplier may also give this
information for a very low or nil price for political and economical reasons, for
example Google gives information for free to their users through its search engine,
so it can increase the number of visitors on its website and this permits Google to
ask more money to the advertisers that want to publish their advertisements on
Google.
-Payoff function: mathematical function that helps to evaluate all gains and losses
for each combination of a specific situation with a consequent specific
action/decision that follows the valuation of the situation. The payoff represents the
earnings you obtain after a choice (so: specific situation -> consequent action -
> earnings). To Marshak, we have a set of situations, partitioned in sets of more
specific situations and so on with sub-partitions: each partition is finer because it
gives a more specific context, more specific information that will help to take better
decisions. Each situation is called information structure because each situation
provides new pieces of information. And when you obtain new information you go
from an informative structure to another, so the context changes and so your
following decision/action does. For each partition you can calculate the value of
information given by the difference of the information value structure after knowing
the information and before receiving it. The more information you have and the
more accurate and worth your decision will be.
2.Gackowski talks about the economics value of information in a business
environment. He talks about the expected cost effectiveness of information/data that
is the expected profits that information will take considering associated risks and
costs (if the result of this calculation is: < 1 Advantageous; >1 Disadvantageous).
This calculation is given by two parameters:
-Expected utility value of information, which represents the benefits you expect to
obtain after buying and using new information
