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Decision Trees

Decision Trees. Jennifer Tsay CS 157B February 4, 2010. What is a Decision Tree?. Formal, structured approach to making decisions Visual representation of a problem and its alternative solutions Helps decompose a complex problem into smaller, more manageable tasks. Why Bother?.

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Decision Trees

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  1. Decision Trees Jennifer Tsay CS 157B February 4, 2010

  2. What is a Decision Tree? • Formal, structured approach to making decisions • Visual representation of a problem and its alternative solutions • Helps decompose a complex problem into smaller, more manageable tasks

  3. Why Bother? • Decision trees can help select the most favorable option using the probability of each outcome and the resulting business value of these outcomes • Form accurate, balanced picture of risks and rewards of a particular choice

  4. Advantages of Decision Trees • Simple to understand and interpret • Have value even with little hard data • Can be combined with other decision techniques

  5. What Are They Used For? • Used in situations of uncertainty • Commonly used in decision analysis to help identify an ideal strategy to reach a goal

  6. Business

  7. Economics

  8. Public Health

  9. Example Decision Trees

  10. Creating a Decision Tree • Decision Trees consist of nodes and branches • Typically three types of nodes: • Decision node that represents the decision to be made • Branches extending out from these decision nodes are alternatives • Chance node • Branches extending out from these chance nodes have some degree of uncertainty about their likelihood of occurrence 3. End node

  11. Creating a Decision Tree • All possible alternatives are mapped out as paths within the decision tree • Probabilities, based on past experience or an educated guess, are identified along each of these paths • Value of outcome is placed at end of each branch

  12. Examining a Decision Tree

  13. How to Make the Right Decision • Add up the values associated with each branch • Path with highest value is the optimal decision

  14. But Always Remember… • Although a decision tree can help you make optimal choices for you to reach a particular goal, you must still weigh in common sense and consider others’ opinions

  15. References • http://en.wikipedia.org/wiki/Decision_tree • http://www.bookrags.com/research/decision-tree-wcs/ • http://www.wired.com/magazine/2010/01/ff_decisiontree/4/ • http://www.zdnetasia.com/i/techguide/decision%20tree.bmp • http://www.inc.com/articles/2003/04/25423.html • http://www.cnq.ca/Storage.asp?StorageID=88802&SiteLanguageID=1 • http://infotechusa.files.wordpress.com/2009/10/economics.jpg • http://health.vctx.org/HealthDepartment%5Ccaduceus.gif • http://transitionwestmarin.files.wordpress.com/2009/04/economics.jpg • http://www.rensco.com/images/publichealth.jpg • http://faculty.msb.edu/prog/Cmrc/images/Inernational%20Business.jpg • http://en.wikipedia.org/wiki/Decision_tree • http://urie.files.wordpress.com/2009/05/examine.jpg • http://www.managers-net.com/decision2.jpg • http://gautam.lis.illinois.edu/monkmiddleware/public/analytics/decision_tree.png • http://users.informatik.uni-halle.de/~jopsi/dinf204/decision_tree.gif • http://www.smallstock.info/tools/disease-nutrition/6358-decision-tree-B.gif

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