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

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Presentation transcript:

Decision Trees Jennifer Tsay CS 157B February 4, 2010

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

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 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 Form accurate, balanced picture of risks and rewards of a particular choice

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

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

Business

Economics

Public Health

Example Decision Trees

Creating a Decision Tree Decision Trees consist of nodes and branches Decision Trees consist of nodes and branches Typically three types of nodes: Typically three types of nodes: 1. Decision node that represents the decision to be made  Branches extending out from these decision nodes are alternatives 2. Chance node  Branches extending out from these chance nodes have some degree of uncertainty about their likelihood of occurrence 3. End node

Creating a Decision Tree All possible alternatives are mapped out as paths within the 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 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 Value of outcome is placed at end of each branch

Examining a Decision Tree

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

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 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

References