Drill blind or pay to learn the odds first?
Drilling blind has an expected value of exactly zero. A seismic test cannot find oil, only update the odds, and the tree prices that update: the value of information, the idea this classic exists to teach.
School Intermediate Decision Tree Pro engine
After you install, this is the model to open.
Is the Test Worth Paying For?
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
This one runs on a Pro engine, and every free install includes five full-quality runs on your own numbers, shared across all five Pro engines rather than five for each. After that, Pro is $199/year.
The answer
The rollback:
- EV of testing first
- 202
- Policy
- drill on good news only
- Value of information
- 202 net of the $50 test
The information is worth 202 even though the test finds no oil, because it lets you put the 600 at risk only when the odds justify it. Every pay-to-learn choice prices the same way: pilots, surveys, inspections, due diligence.
The model
Drill now (cost 600, 30% chance of 2,000), walk away, or test first (cost 50). A favorable reading (42%) lifts the strike odds to 60%; unfavorable drops them to about 8%. All figures in thousands.
| Drill blind | EV exactly 0 |
| Walk away | 0 |
| Test, then decide | rolled back |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
Next question
- Why is the textbook schedule too optimistic?The Classic Project Network, Simulated
- Does discounting to fill the room ever work?What Does the Course Have to Charge?
- Is an equal share of the work actually fair?Share the Marking Fairly
- Did the course work or do the students just differ?Did the Course Move the Scores?
- Would more places actually fix the shortfall?Will the Programme Cover Its Costs?
- Is the cheapest fix on your risk list the best one?What Could Go Wrong This Term?
Every model like this one, and the method behind them: Decision trees.