PROCESSING AND TRANSMITTING INFORMATION, GIVEN A PAY-OFF FUNCTION
CALIFORNIA UNIV LOS ANGELES WESTERN MANAGEMENT SCIENCE INST
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An information system is defined as a chain of information services, encoding processing...transmitting...decoding deciding. Each service is a transformer represented, in general, by a stochastic matrix and a cost function. The inputs of encoding are the pay-off-relevant events. Actions are the output of decoding, actions and events determine the pay-off. The utility of the services to the user is a function of the pay-off and of the different costs. Efficiently choosing an information system is by definition choosing an information system which maximizes the expected utility. Communication engineers restricted themselves to information systems with fixed transmitting channel and identically zero cost functions. Moreover, they equated the users utility function with his pay-off function. The present study is also restricted to information systems with fixed transmitting and zero cost functions and users utility functions identical to their pay-off functions. But the approach is more efficient because the problem is treated of choosing encoding and decoding, given a source of events, a pay-off function and a channel, as a whole.
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