Question number five: Determine the course of action that has the highest expected payoff for this decision tree.
In the subject of game theory, we can make use of a game tree (decision tree) of outcomes to determine the best possible choices to make. A decision tree often consists of all possible outcomes (or payoffs) and the associated probabilities per decision made. Thus, with a game tree, we can find all outcomes and probabilities associated per outcome; then, we can use expected value formula to determine payoffs.
Answer and Explanation:
First, make a list of all the possible decisions you can make to reach a payoff. Next to each decision, put the appropriate probability associated...
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fromChapter 2 / Lesson 12
Clearly identifying all possible solutions for a given decision is an important part of successful management. In this lesson, you will learn how to use a decision tree to identify and select possible courses of action.