decision trees Flashcards
1
Q
what are decision trees
A
they are diagrams that illustrate the choices and possible outcomes of a decision. these possible outcomes are usually given associated probabilities of occurrence.
2
Q
how to calc decision trees outcomes
A
multiple the percentages out success or failure by the potential income
3
Q
why is perfect information important for firms
A
the better the prediction and closer to 100 percent accurate it is, the more benefit can be gained from it
4
Q
how do we calculate perfect information
A
expected profit WITH the information
LESS
expected profit without the information
