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
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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
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