Decision Trees
Decision Trees
A Primer for Decision-making Professionals
By Rafael Olivas 2007
Decision Trees
A Primer for Decision-making Professionals
ii
Decision Trees
A Primer for Decision-making Professionals Table of Contents
Section Page Preface................................................................................................................................. iv 1.0 Introduction................................................................................................................. 1 1.1 Advantages of using decision trees ....................................................................... 1 1.2 About this primer.................................................................................................. 1 1.3 To use this primer................................................................................................. 2 Decision …show more content…
Two other alternatives are also possible: invest $1M in a fixed yield bond or do nothing. A fixed-yield investment and doing nothing are examples of baseline alternatives: choices that can be used to compare the overall merits of the decision alternatives.
3.1.1 Decision nodes and the root node Small squares identify decision nodes. A decision tree typically begins with a given “first decision.” This first decision is called the root node. For example, the root node in a medical situation might represent a choice to perform an operation immediately, try a chemical treatment, or wait for another opinion. Draw the root node at the left side of the decision tree.
3.1.2 Chance nodes Small circles identify chance nodes; they represent an event that can result in two or more outcomes. In this illustration two of the decision alternatives connect to chance
A Primer for Decision-making Professionals
By Rafael Olivas 2007
Decision Trees
A Primer for Decision-making Professionals
ii
Decision Trees
A Primer for Decision-making Professionals Table of Contents
Section Page Preface................................................................................................................................. iv 1.0 Introduction................................................................................................................. 1 1.1 Advantages of using decision trees ....................................................................... 1 1.2 About this primer.................................................................................................. 1 1.3 To use this primer................................................................................................. 2 Decision …show more content…
Two other alternatives are also possible: invest $1M in a fixed yield bond or do nothing. A fixed-yield investment and doing nothing are examples of baseline alternatives: choices that can be used to compare the overall merits of the decision alternatives.
3.1.1 Decision nodes and the root node Small squares identify decision nodes. A decision tree typically begins with a given “first decision.” This first decision is called the root node. For example, the root node in a medical situation might represent a choice to perform an operation immediately, try a chemical treatment, or wait for another opinion. Draw the root node at the left side of the decision tree.
3.1.2 Chance nodes Small circles identify chance nodes; they represent an event that can result in two or more outcomes. In this illustration two of the decision alternatives connect to chance