Abstract
Information that will reduce the risk of a decision may be costly in time, effort, or money. The maximum amount that should be invested in the information—its fair cost—depends upon payoffs, the diagnosticity of the data source, and prior probabilities of the hypotheses. These are the independent variables of this experiment. Subjects estimated the fair costs by means of the Marschak bidding procedure. The subjects' bids changed in the direction appropriate to each of the three independent variables, but not enough to be optimal.
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