Which description best defines a decision tree?

Which description best defines a decision tree?

• A. A pictorial method of showing a sequence of interrelated decisions and their expected outcomes
• B. A table listing all possible costs
• C. A single decision with two outcomes
• D. A statistical test for comparing groups

Answer: (A)

Decision trees map decisions as a sequence of choices, with branches showing what could happen after each option and the associated outcomes or payoffs. This visual layout lets you compare different paths and their expected results under uncertainty, helping you choose the most beneficial course of action. That description—the pictorial method of showing a sequence of interrelated decisions and their expected outcomes—is the best fit. The other options miss the essence: a table of costs is just data listing, not a decision path; a single decision with two outcomes is too simplistic and ignores later steps and uncertainty; a statistical test for comparing groups is about analyzing data, not planning decisions.

Decision trees map decisions as a sequence of choices, with branches showing what could happen after each option and the associated outcomes or payoffs. This visual layout lets you compare different paths and their expected results under uncertainty, helping you choose the most beneficial course of action. That description—the pictorial method of showing a sequence of interrelated decisions and their expected outcomes—is the best fit. The other options miss the essence: a table of costs is just data listing, not a decision path; a single decision with two outcomes is too simplistic and ignores later steps and uncertainty; a statistical test for comparing groups is about analyzing data, not planning decisions.