X4.1 - Decision-Making, Possibilities and Probabilities, Decision trees

Question 1

What are Levels of Uncertainty?

Answer 1

Decisions are affected by states like certainty, risk, structured uncertainty, and unstructured uncertainty, each requiring distinct approaches based on the clarity of outcomes and probabilities.

Question 2

What are Decision Trees?

Answer 2

Introduced as a tool to visualize and quantify outcomes by assigning probabilities to different scenarios, aiding in evaluating alternatives and making informed decisions.

Question 3

Example of a decision tree

Answer 3

Question 4

What is the Risk and Probability?

Answer 4

Understanding and assessing probabilities are critical, especially for financial decisions, as shown through practical examples like a market stall owner optimizing product orders.

Question 5

What is Dynamic Nature?

Answer 5

Decision-making adapts to new information and changing conditions, emphasizing flexibility in strategy.

Question 6

What are Practical Applications?

Answer 6

: Concepts like risk vs. reward, scenario analysis, and game theory illustrate the integration of probability and strategic thinking in real-world contexts