Decision Trees
A decision tree is a map of the possible outcomes of a series of related choices. It allows an individual or organization to weigh possible actions against one another based on their costs, probabilities, and benefits.
Decision Trees can can be used either to drive informal discussion or to map out an algorithm that predicts the best choice mathematically.
To draw a decision tree, first pick a medium. You can draw it by hand on paper or a whiteboard, or you can use special decision tree software. In either case, here are the steps to follow:
Start with the main decision. Draw a small box to represent this point, then draw a line from the box to the right for each possible solution or action. Label them accordingly.
Add chance and decision nodes to expand the tree. From each decision node, draw possible solutions. From each chance node, draw lines representing possible outcomes. If you intend to analyze your options numerically, include the probability of each outcome and the cost of each action.
Continue to expand until every line reaches an endpoint. This means there are no more choices to be made or chance outcomes to consider. Assign a value to each possible outcome. It could be an abstract score or a financial value. Add triangles to signify endpoints.
Here’s an example of a Decision Tree –
While you may face many difficult decisions, how to make a decision tree now won’t be one of them. With a complete decision tree, you’re now ready to begin analyzing the decision you face.
