Decision Tree
A quantitative decision-making tool that maps out possible options, their probabilities, and expected outcomes in a tree...
Formula
Expected Value (EV) = Σ (Probability × Outcome Value)
Real World
Netflix used decision tree-style analysis when choosing whether to produce original content like 'House of Cards', weighing the probability of subscriber growth against the $100m production cost.
Exam Focus
Always show your EV calculation working; subtract node costs before comparing branches, or you will lose marks.
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