Advantages
Amongst decision support tools, decision trees (and influence diagrams) have several advantages:
Decision trees:
- Are simple to understand and interpret. People are able to understand decision tree models after a brief explanation.
- Have value even with little hard data. Important insights can be generated based on experts describing a situation (its alternatives, probabilities, and costs) and their preferences for outcomes.
- Possible scenarios can be added
- Worst, best and expected values can be determined for different scenarios
- Use a white box model. If a given result is provided by a model.
- Can be combined with other decision techniques. The following example uses Net Present Value calculations, PERT 3-point estimations (decision #1) and a linear distribution of expected outcomes (decision #2):
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