Decision Trees

What does a square represent in a decision tree?

A decision node.

What does a circle represent in a decision tree?

A chance node (uncertainty).

What is the rollback method?

Solving a decision tree from right to left: chance → EMV, decision → max EMV.

What is a chance node?

a circle - an uncertain event — something the decision maker cannot control.
Each branch coming out of a chance node has:

• a possible outcome, and

• a probability attached to it.

What is a decision node?

The square in a decision tree - represents a point where the decision maker must choose between alternatives.

You control what happens at a decision node.

What do you do at a decision node?

• Calculate the EMV of each available alternative (each branch).

• Choose the branch with the highest EMV.

what is a triangle node?

The end point of a branch in a decision tree, represents a final outcome — the point where:

• all decisions have been made

• all uncertainty is resolved

• no more branches follow