DA3-DT - Decision Making under Uncertainty Decision Trees...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1 1 Decision Trees UGBA 143 Game Theory and Business Decisions 2 Decision Making under Uncertainty So far: situations involving a single decision Practical business scenarios: ± Multiple choices: Happen at different points in time ± Inter-related: Future prospects depend on the present How to deal with sequential decisions over time? Analytic tool: Decision trees 3 Overview Decision Trees: Displaying Alternatives Adding Data Choosing Course of Action 4 Displaying Alternatives Cocktail party scenario Decision: Outdoors or Indoors? Event: Rain or Shine? Payoffs: • Outdoors / Rain: disaster • Outdoors / Shine: ultimate happiness • Indoors / Rain: relief • Indoors / Shine: regret 5 Displaying Alternatives Decision tree representation: Decision nodes (squares) Chance nodes (circles) Sequence of decisions / events arranged in chronological order from left to right Useful to show the routes by which the various outcomes are achieved Associated with each complete course through the tree is an outcome (shown at rightmost end) 6 ABC Chemical Industries, Ltd. New nitrogen-based compound (market life of 10 years)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/01/2008 for the course UGBA 143 taught by Professor Xuanmingsu during the Spring '08 term at University of California, Berkeley.

Page1 / 3

DA3-DT - Decision Making under Uncertainty Decision Trees...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online