Decision Trees, Construction

A decision model is a mathematical formulation of a decision problem that compares alternative choices in a formal process by calculating their expected outcome. The decision tree is a graphical representation of a decision model that represents the basic elements of the model. The key elements of the model are the possible choices, information about chance events, and preferences of the decision maker. The choices are the alternatives being compared in the decision model. The information consists of an enumeration of the events that may occur consequent to the choice and the probabilities of each of their outcomes. Preferences are captured by assessing utilities of each outcome that measure the desirability of each outcome. In addition to a utility, each outcome may be associated ...

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