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Much of the recent research
studies the broad economic benefits of information technology. Decision
trees are a convenient method for measuring the benefits of specific
information systems. More importantly, using decision trees to analyze a
large sample of simulated information systems demonstrates that
information systems economically benefit decision making.
A series of simulations have been generated that allow
calculation of the economic value of information systems as system
accuracy is varied. Simulated information systems, which were 75%
accurate, generated more than a 20% increase in dollar payoff compared to
decision making without information systems. When information system
accuracy rose to 95%, the benefits rose over 35%.
Simulation data, as opposed to survey data, is critical to
establishing the general value of imperfect information systems. Very
large sample sizes can be generated to establish the relationships between
information system accuracy and economic benefits. Also, simulations
produce a wide variety of conditions, not just lumpy conditions where an
manager may estimate probabilities at 5% intervals, e.g. 95%, 90%, 85%, et
cetera. Keywords:
Decision-making processes, IS evaluation
Categories: AC0406, AD0517, EI0101, EI0106
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