Chapter 10 – Decision trees
Learning Objectives
- Understanding decision making under uncertainty
- Understanding and calculating expected values
- Using decision trees to assess decisions under uncertainty
The analysis of complex decisions with signifcant uncertainty can be confusing because 1) the consequence that will result from selecting any specifed decision alternative cannot be predicted with certainty, 2) there are often a large number of different factors that must be taken into account when making the decision, 3) it may be useful to consider the possibility of reducing the uncertainty in the decision by collecting additional information, and 4) a decision maker s attitude toward risk taking can impact the relative desirability of di® erent alternatives. This chapter reviews decision tree analysis procedures for addressing such complexities.
Attribution
By Craig W. Kirkwood, Chapter 1 of Decision Tree Primer, January 11, 2013, licensed under a Creative Commons Attribution License CC BY-NC-SA 4.0.
