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Decision Analysis 3: Decision Trees

This brief video explains
*the components of the decision tree
*how to construct a decision tree
*how to solve (fold back) a decision tree.

Other videos:

Decision Analysis 1: Maximax, Maximin, Minimax Regret

Decision Analysis 1.1 (Costs): Maximax, Maximin, Minimax Regret

Decision Analysis 2.1: Equally Likely (Laplace) and Realism (Hurwicz)

Decision Analysis 2: EMV & EVPI – Expected Value & Perfect Information

Decision Analysis 4: EVSI – Expected Value of Sample Information

Decision Analysis 5: Posterior Probability Calculations




  1. if i'm the decision maker i will opt to choose bond instead of stock. doesn't matter it is growing or declining you will still get 20 compare to stocks. If the end value of stock is bigger than bonds by higher margin instead of 0.2 i may choose stocks.

  2. Hi Joshua, is it possible to have 3 branches (to represent the following decision alternatives namely D1, D2 and D3) coming out of the decision node, but with decision alternative D3 being split into D3a (work with company ABC: 40%) and D3b (work with company XYZ: 60%) via chance node?       Each of the decision alternatives: D1, D2, D3a and D3b will also have chance node (high sales: 20% and low sales: 80%)          Is that too many chance node? Or should D3 be a decision node instead of a chance node?        I hope this is not too confusing. Thanks!


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