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

2. 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

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 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

4. 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

5. 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

6. Business

7. Economics

8. Public Health

9. Example Decision Trees

10. 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

11. 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

12. Examining a Decision Tree

14. 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

16. 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

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