Decision Tree

Reviewed by Komal | Updated on Aug 27, 2020

What is a Decision Tree?

A decision tree is a picture or chart used by people to determine a course of action or to illustrate a statistical probability. This forms the profile of the woody plant parent, usually upright but sometimes lying on its side.

Each branch of the decision tree signifies a possible result, decision, or reaction. The farthest branches in the tree represent the final outcomes.

People use the decision trees to clarify a complex problem and find an answer to it. Decision trees are often used in the determination of a course of action in finance, investment, or business.

Basics of a Decision Tree

A decision tree is a visual representation of a decision and any potential outcome or consequence of that decision. In a variety of situations, individuals deploy decision trees, from something basic and personal ("Should I go out for dinner?") to more complicated technological, research, or microeconomic undertakings.

By displaying a series of steps, decision trees provide people with an effective and easy way of viewing and understanding a decision's potential options and its range of possible outcomes. The decision tree also makes people recognise any good option and weigh each course of action against the risks and rewards each option can yield.

An organisation may utilise decision trees as a sort of support system for decision making. The structured model allows the chart reader to see how and why one choice might lead to the next, using the branches to indicate mutually exclusive options. The structure allows users to take up a problem with various possible solutions and view those solutions in a simple, easy-to-understand format, which also demonstrates the relationship between different events or decisions.

How to Make a Decision Tree

To make a decision tree, you need to start with choosing a specific decision to make. Upon the far left of the eventual tree, you can draw a small square to represent the earlier decision. You then draw out the lines from the box; every line moves from left to right, and each line represents a possible option. Or you can start from the top of a page or screen with a square, and draw the lines downwards.