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Decision Tree Analysis

Decision ModelsDecision making

Reference model

Steps in Decision Tree AnalysisA sequence of 6 steps, read from the first to the last: 1, Define the decision problem; 2, Identify the alternatives; 3, Determine the outcomes; 4, Assign probabilities; 5, Calculate expected values; 6, Make the decision.Define the decisionproblemClearly state the decision tobe made.1Identify thealternativesList all possible choicesavailable.2Determine the outcomesOutline the possible resultsfor each alternative.3Assign probabilitiesEstimate the likelihood ofeach outcome occurring.4Calculate expectedvaluesDetermine the expected valuefor each alternative.5Make the decisionChoose the alternative withthe best expected value.6

Decision trees illustrate choices and their potential outcomes in a structured format.

About this model

A graphical representation of decisions and their possible consequences, including chance event outcomes and resource costs.

Originator not stated.

How to read it

  • Follow the branches to see the different decision paths.
  • Evaluate the outcomes at the end of each branch.

What this does

Helps visualize decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

When to use it

Use it when you need to evaluate multiple decision paths and their potential outcomes to make an informed choice.

Not when: Do not use it when the decision paths are not clear or when qualitative factors dominate over quantitative analysis.

What happens next

Consider using a sensitivity analysis to understand how changes in assumptions affect outcomes.

Golden thread

Builds on ←

  • Problem statement
  • Options list

Feeds into →

  • Implementation plan

Use this tool, free

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Drafted with AI and reviewed by Eccellere on 04/11/2026. Guidance, not advice: apply your own judgement.