Decision Trees (AQA A-Level Business): Flashcards
📚Flashcards
Practise the cards
10 cards from this deck
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Practise the cards
10 cards from this deck
Decision tree definition
Decision tree definition
Visual diagram for choosing between options with uncertain outcomes
Square symbol meaning
Square symbol meaning
Decision point/choice to be made
Circle symbol meaning
Circle symbol meaning
Chance node/uncertain outcome
Symbol mnemonic
Symbol mnemonic
Square for choice, Circle for chance
3 labels needed on branches
3 labels needed on branches
Cost, outcomes, probabilities
Expected value formula
Expected value formula
(Outcome₁×Prob₁)+(Outcome₂×Prob₂)-Cost
Benefit: analytical thinking
Benefit: analytical thinking
Managers quantify decisions rather than rely on gut feeling
Limitation: manager bias
Limitation: manager bias
Biased projections making favoured option appear more attractive
Limitation: probabilities
Limitation: probabilities
Based on past experience/guesswork, educated guesses
Factors decision trees ignore
Factors decision trees ignore
Mission, values, ethics, external environment