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Unformatted text preview: .05 Low Medium .15 Low Low .80 Buy Don't Buy Event Tree Example: Friday, October 01, 2010 7:20 PM Unfiled Notes Page 1 When you have a choice between options, use a decision node (square) If there are outcomes that are uncertain, use a chance node. Start by building up the decision tree from left to right. When you reach a decision node, stop and calculate the EMV of all possible uncertain Once the decision tree has been built up, work from right to left, at each branch. Tips for Working through Decision Trees: Unfiled Notes Page 2 outcomes that lead to that decision node. At each decision node, assume the option with the highest EMV, and repeat, working back through the chance nodes and decision nodes until all branches have been completed. Unfiled Notes Page 3...
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- Fall '11