What is a decision tree?
A decision tree is a map of the possible outcomes of a series of related choices. It allows an individual or organization to weigh possible actions against one another based on their costs, probabilities, and benefits. They can can be used either to drive informal discussion or to map out an algorithm that predicts the best choice mathematically.
A decision tree typically starts with a single node, which branches into possible outcomes. Each of those outcomes leads to additional nodes, which branch off into other possibilities. This gives it a treelike shape.
There are three different types of nodes: chance nodes, decision nodes, and end nodes. A chance node, represented by a circle, shows the probabilities of certain results. A decision node, represented by a square, shows a decision to be made, and an end node shows the final outcome of a decision path.
Decision tree symbols
| Shape | Name | Meaning |
|---|---|---|
 | Decision node | Indicates a decision to be made |
 | Chance node | Shows multiple uncertain outcomes |
 | Alternative branches | Each branch indicates a possible outcome or action |
 | Rejected alternative | Shows a choice that was not selected |
 | Endpoint node | Indicates a final outcome |
How to draw a decision tree
1. Start with the main decision. Draw a small box to represent this point, then draw a line from the box to the right for each possible solution or action. Label them accordingly.
2. Add chance and decision nodes to expand the tree as follows:
- If another decision is necessary, draw another box.
- If the outcome is uncertain, draw a circle (circles represent chance nodes).
- If the problem is solved, leave it blank (for now).
From each decision node, draw possible solutions. From each chance node, draw lines representing possible outcomes. If you intend to analyze your options numerically, include the probability of each outcome and the cost of each action.
3. Continue to expand until every line reaches an endpoint, meaning that there are no more choices to be made or chance outcomes to consider. Then, assign a value to each possible outcome. It could be an abstract score or a financial value. Add triangles to signify endpoints.
With a complete decision tree, you’re now ready to begin analyzing the decision you face.
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