The Economics of Augmented and Virtual Reality

TL;DR

This paper develops a framework to evaluate the economic value of AR and VR technologies by analyzing their ability to manage informational complexity and immersive experience in decision-making contexts.

Contribution

It introduces metrics for assessing AR and VR value, providing a novel framework for analyzing their economic impact across different sectors.

Findings

AR helps understand complex environments

VR enables access to risky or distant environments

Framework aids in identifying impactful applications

Abstract

This paper explores the economics of Augmented Reality (AR) and Virtual Reality (VR) technologies within decision-making contexts. Two metrics are proposed: Context Entropy, the informational complexity of an environment, and Context Immersivity, the value from full immersion. The analysis suggests that AR technologies assist in understanding complex contexts, while VR technologies provide access to distant, risky, or expensive environments. The paper provides a framework for assessing the value of AR and VR applications in various business sectors by evaluating the pre-existing context entropy and context immersivity. The goal is to identify areas where immersive technologies can significantly impact and distinguish those that may be overhyped.