probability trees/decision trees Flashcards
1
Q
benefits of decision trees
A
- Choices are set out in a logical way
- Potential options & choices are considered at the same time
- Use of probabilities enables the “risk” of the options to be addressed
- Likely costs are considered as well as potential benefits
- Easy to understand & tangible results
2
Q
drawbacks of decision trees
A
- Probabilities are just estimates – always prone to error
- Uses quantitative data only – ignores qualitative aspects of decisions
- Assignment of probabilities and expected values prone to bias
- Decision-making technique doesn’t necessarily reduce the amount of risk