Decision Tree

Build Tree

Node types: ■ Decision – selects the branch with highest EV | ■ Chance – probabilities of all branches must sum to 1 | ■ Outcome – payoff (leaf node)

Example 1 – Investment:
Decision: invest or not. If invested: Success (P=0.6, +200) or Failure (P=0.4, −80).

Example 2 – Product choice:
Two products each with three market scenarios. Product A has a sub-branch (Normal → Expand/Withdraw).