First, was the information search undertaken to the point where it would not be marginally profitable to continue the search procedure? Second, was the information obtained used in the appropriate form—for example, expected-present-value terms? Third, was the appropriate decision criterion used? If the answer is yes to all three questions, it was a good decision regardless of the actual outcome.
Note: The quality of decisions must be judged a priori, before the actual outcomes. Decision making under risk and uncertainty necessarily involves unsatisfactory outcomes from time to time. You win some and you lose some, but consistent application of the appropriate decision criterion, using as much good information as it seemed profitable to purchase, should ensure maximization of the firm’s net worth, subject to risk considerations, over a series of decisions made. A bad decision will be made if the decision maker doesn’t seek information when its cost is expected to be less than its value, if the decision maker ignores or discards information, or if an inappropriate decision criterion is used to make the decision. If such a decision turns out to be very profitable, the decision maker was just lucky and should not expect this luck to hold forever.