Page 168 - Artificial Intelligence for the Internet of Everything

154 Artificial Intelligence for the Internet of Everything

E (V | b)
9/32
|
0.2

0 0
| b
0.5 1.0 5/4 1.5 2.0

–0.2

–0.4
–1/2
Fig. 9.2 EðVjbÞ.

9.4 VALUE DISCUSSION

We see from the above that the expected value of a random variable is
very important to a decision maker; the information that is used has
value. This notion of value is important in the IoT because it can/will
be the source of information, moderated by AI that provides it, modifies
it, or protects it. From this perspective, the IoT may provide all of the
information, too much information, or a limited amount of the infor-
mation. We see in the above example, that we do not need the entire
cost, given Howard’s assumptions, only the mean of the cost. Therefore,
it need not require many bits of valuable information. Extending
Howard’s notion at this point, what is the information we have and
what is its value?
1. Eq. (9.1): Modeling equation
2. Eq. (9.2): Standard probability theory
3. Assumption 9.1: Independence of the company’s bid
4. Assumption 9.2: Cost and lowest bid independence

5. Behavior of C
6. Behavior of L
Let us just concentrate on the last two items for now. What we have actually
used to this point is only the mean of C, and for simplicity, we set:

μ≜EðCÞ