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150 Artificial Intelligence for the Internet of Everything

and (2) offers a transactional basis for VoI that involves decision making in a
consumer-supplier process:
A completely satisfactory definition of what constitutes information is problematic.
The idea of information is context-dependent and multidimensional. Analogous to
the level at which modern physics describes the entire universe in terms of the
equivalence between matter and energy is the level at which communications the-
ory provides a procedure for specifying anything (including matter and energy) in
terms of its formal information content. The formal or quantitative definition and
measure of information is that which reduces uncertainty or changes an individ-
ual’s degree of belief about the world. However, except for the utility of this con-
struct in purely engineering contexts, it has not provided the foundation for a
practical information-measurement system in most general applications.
Glazer’s work uses a case study to illustrate the relationship between infor-
mation value and transactions and thus does little toward as theoretic
approach to quantifying VoI. Further, while Glazer illustrates processes that
may be automated by AI, his treatment does little to support the detailed
decision-making process. Within a complex intelligent system such as
the IoT, local AI as a decision maker will have to make microdecisions
that enable scalability, given the decentralized nature of the IoT network
(Ge, Yang, & Han, 2017). This raises the question, how can value be deter-
mined quantitatively in an application agnostic or generalizable sense? It is
through this merged lens of IoT and AI that we examine a theory of VoI. To
provide grounding and leverage the literature that examines value from a
transactional basis, we start with the work of Howard.

9.3 REWORKING HOWARD’S INITIAL EXAMPLE

Howard’s work (Howard, 1966) takes a business approach to defining infor-
mation value. In this section we borrow freely from Howard. We do not
quote phrases for the sake of readability. We do not make any claims to this
work and just we rework Howard’s; the only novel thing in this section is
our choice of notation and exposition.
We begin with Howard’s very practical problem of how much a com-
pany should bid to win a contract. If the bid is too high, it loses the contract.
If the bid is too low, it gets the contract, but loses money on the deal. There-
fore the company attempts to place the bid that will get it the contract while
maximizing its profit. The information that the company uses to decide its bid
is therefore of extreme importance and this range of information is consid-
ered to make up the sample space in question.