Lecture 5 - Decision Analysis Flashcards
1
Q
a square indicates a _____ node
A
CHOICE
2
Q
a circle indicates a ____ node
A
CHANCE
3
Q
a triangle indicates…
A
END OF SCENARIOS. conduct calculation now
4
Q
a triangle is a ___ node
A
terminal
5
Q
probabilities for each branch must add up to…
A
1
6
Q
give the decision tree process
A
- Draw the tree and all the branches
- Fill in PROBABILITIES at chance nodes
- Assign outcome amounts (make sure to include the endpoint too)
- Starting from the RIGHT, fold back to the choice node on the left
- choose choice with best sum of expected values
7
Q
you READ a decision tree from __ to ___
A
left to right
8
Q
you CALCULATE a decision tree from __ to ___
A
right to left
9
Q
often, WHICH TYPE OF STUDY will use a decision tree to help organize calculations and analysis?
A
CEA
