A decision tree is a diagram representing the series of possible options and next steps as you work your way through a decision.
When to Use One
A decision tree is most valuable when you are considering options where the outcomes are not certain. The decision tree guides you to think about and predict the likelihood of each option occurring. This helps you more clearly see the benefits of one option over another.
How it works
All decision trees are built using three key parts (also called nodes):
Root—this is the decision you are weighing
Branches—these represent alternative courses of action
Leaves—here is where you either make a decision, or identify an unknown variable
Square leaves = you make a decision and move on to the next one
Round leaves = the result of this outcome is not clear and you need to identify the chance of it happening
Examples of a Decision Tree in Action
This video created by the Decision Education Foundation shows how using a Decision Tree can help a coach increase the odds of winning a basketball game.
This video created by the University of Toronto shows how a company could determine whether it should buy or manufacture a key part to maximize profit.
This illustration shows how a common, and difficult, decision can be aided by a decision tree.
How does a Decision Tree differ from the Weight-and-Rate Method?
The Weight-and-Rate method, another valuable decision-making tool, is most helpful when the options are clear, but the importance of each is not. Consider that you are deciding between three possible new apartments. The cost, morning light, or location to the transportation are all set variables. What you need to determine is how important each is to you in your decision. Using the weight-and-rate tool can help you determine the outcome with the highest degree of certainty. Whereas a Decision Tree can help you decide if you want to change apartments.
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