Decision tree explained

Main components

A decision tree consists of mainly two components: 

• Nodes
• Edges

There are three different types of nodes:

• Decision node
• Chance node
• Terminal node

Decision nodes represent a user choice, like choosing whether to go for a project or not.

Chances nodes represent points of uncertainty during a process or project, like whether a product is accepted by a store.

Terminal nodes are the last node in a tree. It will show the payoff and probability for the associated branch in the tree.

A node can have any number of children, connected by edges:

Values and probabilities

Values are assigned to edges by double clicking them and entering a payoff and an optional name in the top right modal. Once a payoff has been typed, you can see that the payoff of both the root (leftmost) nodes, and the terminal node is updated.

A Chance node with multiple children will by default give the children an equal probability. To change the probabilities of either children, either double click the chance node, or one of the children, to open the modal. Then insert a decimal value of your desired probability in either edges. A # represents the remainder of the probability, so that the sum of probabilities are equal to 1.