how to construct a decision tree 1.list each decision nodes & its alternatives. 2.list each...
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How to construct a decision tree
1. List each decision nodes & its alternatives.2. List each chances nodes& its alternatives.3. Draw the nodes and links.4. Add costs & probabilities along links5. Calculate utilities for utility (leftmost) nodes6. Calculate expected utilities
Example
• You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
1. List each decision nodes & its alternatives.
• Which project?– Fancy– Mundane
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
2. List each chance nodes & its alternatives.
• Outcome?– Success– Failure
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
3. Draw nodes as tree
Project?
Outcome?
Outcome?
Fancy
Mundane
Success
Success
Failure
Failure
Decision nodes
are square
Chance nodes
are oval
Utility nodes are
like diamonds
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
4. Add costs and probabilities to links
Project?
Outcome?
Outcome?
Fancy
cost 1M$
Mundanecost 0.5M$
Success
p=0.1
Success
p=0.8
Failurep=0.2
Failurep= 0.9
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
5. Calculate utility values for utility nodes
Project?
Outcome?
Outcome?
Fancy
cost 1M$
Mundanecost 0.5M$
10M$
-0.5M$
1M$
-1M$
Success
p=0.1
Success
p=0.8
Failurep=0.2
Failurep= 0.9
Benefit: 0Cost: 0.5M$
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
Benefit: 11M$Cost: 1M$
6. Calculate expected utilities, moving leftward
Project?
Outcome?
Outcome?
Fancy
cost 1M$
Mundanecost 0.5M$
10M$
-0.5M$
1M$
-1M$
Success
p=0.1
Success
p=0.8
Failurep=0.2
Failurep= 0.9
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
EU = 0.1*10=1.0
EU = 0.9*(-1)=-0.9
EU = 0.8*1=0.8
EU = 0.2*(-0.5)=-0.1
6. Calculate expected utilities moving leftward
Project?
Outcome?
Outcome?
Fancy
cost 1M$
Mundanecost 0.5M$
10M$
-0.5M$
1M$
-1M$
Success
p=0.1
Success
p=0.8
Failurep=0.2
Failurep= 0.9
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
EU = 0.1*10=1.0
EU = 0.9*(-1)=-0.9
EU = 0.8*1=0.8
EU = 0.2*(-0.5)=-0.1
EU = 1.0-0.9= 0.1
EU = 0.8-0.1=0.7
6. Calculate expected utilities moving leftward
Project?
Outcome?
Outcome?
Fancy
cost 1M$
Mundanecost 0.5M$
10M$
-0.5M$
1M$
-1M$
Success
p=0.1
Success
p=0.8
Failurep=0.2
Failurep= 0.9
You need to decide whether to do a fancy project or a mundane project. Either project can succeed or fail. There is a 10% chance of success for the fancy project, and 80% chance of success for the mundane project. The fancy project costs 1M$ to execute, and if it succeeds, you get 11M$. If you lose, you get nothing. The mundane project costs 0.5M$ to execute, and you get 1.5M$ if it succeeds. If it fails, you get nothing. Which project should you do?
EU = 0.1*10=1.0
EU = 0.9*(-1)=-0.9
EU = 0.8*1=0.8
EU = 0.2*(-0.5)=-0.1
EU = 1.0-0.9= 0.1
EU = 0.8-0.1=0.7
Best choice
A more complex example• Your show dog has cancer. If you do nothing, there is a
90% chance she will die. If she has surgery, there is a 40% chance of curing the cancer, 10% chance of dying from the surgery, and a 50% chance that the cancer will survive, in which case, she has the usual 90% chance of dying. If she gets chemo, there is a 20% chance of curing the cancer, and an 80% that the cancer will remain, in which surgery can be performed, with the same risks and outcomes as mentioned above. Chemo cannot be done after surgery, by the way. The dog is worth 900K$ if she is alive, and nothing if she is dead. Surgery costs $10K and chemo costs 4K$. What should you do?
1. List each decision nodes & its alternatives.• Which treatment?
– surgery– chemo– Nothing
• After chemo fails, which treatment?– surgery– nothing
Your show dog has cancer. If you do nothing, there is a 90% chance she will die. If she has surgery, there is a 40% chance of curing the cancer, 10% chance of dying from the surgery, and a 50% chance that the cancer will survive, in which case, she has the usual 90% chance of dying. If she gets chemo, there is a 20% chance of curing the cancer, and an 80% that the cancer will remain, in which surgery can be performed, with the same risks and outcomes as mentioned above. Chemo cannot be done after surgery, by the way. The dog is worth 900K$ if she is alive, and nothing if she is dead. Surgery costs $10K and chemo costs 4K$. What should you do?
2. List each chance nodes & its alternatives.
• Outcome?– Cancer cured– Died due to surgery (only for surgery node)– Cancer not cured
Your show dog has cancer. If you do nothing, there is a 90% chance she will die. If she has surgery, there is a 40% chance of curing the cancer, 10% chance of dying from the surgery, and a 50% chance that the cancer will survive, in which case, she has the usual 90% chance of dying. If she gets chemo, there is a 20% chance of curing the cancer, and an 80% that the cancer will remain, in which surgery can be performed, with the same risks and outcomes as mentioned above. Chemo cannot be done after surgery, by the way. The dog is worth 900K$ if she is alive, and nothing if she is dead. Surgery costs $10K and chemo costs 4K$. What should you do?
3. Draw nodes
Treatment?
Outcome?
Outcome?
Surgery
chemo
Cured
Cured ?
Uncured
Surgery kills
•Your show dog has cancer. If you do nothing, there is a 90% chance she will die. If she has surgery, there is a 40% chance of curing the cancer, 10% chance of dying from the surgery, and a 50% chance that the cancer will survive, in which case, she has the usual 90% chance of dying. If she gets chemo, there is a 20% chance of curing the cancer, and an 80% that the cancer will remain, in which surgery can be performed, with the same risks and outcomes as mentioned above. Chemo cannot be done after surgery, by the way. The dog is worth 900K$ if she is alive, and nothing if she is dead. Surgery costs $10K and chemo costs 4K$. What should you do?
Outcome?
Noth
ing
cost
0$
Die?uncured
Die
Live
Outcome?
Die
Live Die?
Die
Live
Treatment?Surgery
Nothing
4. Add costs & probabilities
Treatment?
Outcome?
Outcome?
Surgery
cost 10K$
chemocost 4K$
Cured
p=0.4
Cured
p=0.2
Uncuredp=0.8
Surgery killsp= 0.1
•Your show dog has cancer. If you do nothing, there is a 90% chance she will die. If she has surgery, there is a 40% chance of curing the cancer, 10% chance of dying from the surgery, and a 50% chance that the cancer will survive, in which case, she has the usual 90% chance of dying. If she gets chemo, there is a 20% chance of curing the cancer, and an 80% that the cancer will remain, in which surgery can be performed, with the same risks and outcomes as mentioned above. Chemo cannot be done after surgery, by the way. The dog is worth 900K$ if she is alive, and nothing if she is dead. Surgery costs $10K and chemo costs 4K$. What should you do?
Outcome?
Noth
ing
cost
0$
Die?uncured
p=0.5
Die
p=0.9
Livep=0.1
Outcome?
Die
p=0.9Live
p=0.1Die?
Die
p=0.9
Livep=0.1
Treatment?Surgery
cost
10K$
Nothing
5. Calculate utility values for utility nodes
Treatment?
Outcome?
Outcome?
Surgery
cost 10K$
chemocost 4K$896K$
-10K$
Cured
p=0.4
Cured
p=0.2
Uncuredp=0.8
Surgery killsp= 0.1
•Your show dog has cancer. If you do nothing, there is a 90% chance she will die. If she has surgery, there is a 40% chance of curing the cancer, 10% chance of dying from the surgery, and a 50% chance that the cancer will survive, in which case, she has the usual 90% chance of dying. If she gets chemo, there is a 20% chance of curing the cancer, and an 80% that the cancer will remain, in which surgery can be performed, with the same risks and outcomes as mentioned above. Chemo cannot be done after surgery, by the way. The dog is worth 900K$ if she is alive, and nothing if she is dead. Surgery costs $10K and chemo costs 4K$. What should you do?
Outcome?
Noth
ing
cost
0$
890K$
-10K$
Die?890K$
uncuredp=0.5
Die
p=0.9
Livep=0.1
Outcome?
0$
900K$
Die
p=0.9Live
p=0.1
-4K$
Die?896K$
Die
p=0.9
Livep=0.1
Treatment?Surgery
cost
10K$
Nothing
6. Calculate expected utilities
Treatment?
Outcome?
Outcome?
Surgery
cost 10K$
EU=444
chemocost 4K$EU=619.2896K$
-10K$
Cured
p=0.4
EU=365
Cured
p=0.2
EU=179.2
Uncuredp=0.8EU=440
Surgery killsp= 0.1EU=-1
•Your show dog has cancer. If you do nothing, there is a 90% chance she will die. If she has surgery, there is a 40% chance of curing the cancer, 10% chance of dying from the surgery, and a 50% chance that the cancer will survive, in which case, she has the usual 90% chance of dying. If she gets chemo, there is a 20% chance of curing the cancer, and an 80% that the cancer will remain, in which surgery can be performed, with the same risks and outcomes as mentioned above. Chemo cannot be done after surgery, by the way. The dog is worth 900K$ if she is alive, and nothing if she is dead. Surgery costs $10K and chemo costs 4K$. What should you do?
Outcome?
Noth
ing
cost
0$
EU=9
0890K$
-10K$
Die?890K$
uncuredp=0.5EU=80
Die
p=0.9
EU= -9Live
p=0.1EU=89
Outcome?
0$
900K$
Die
p=0.9
EU=0Livep=0.1
EU=90
-4K$
Die?896K$
Die
p=0.9
EU=-3.6Live
p=0.1EU=89.6
Treatment?
Surgery
cost
10K$
EU=440
NothingEU=86
My disk drive is flakey. Tech says that there is a 10% chance it will crash in the next week, and replacing the disk and data will cost me
$200. If I replace the disk, it will cost me $70 and it will not crash. If I save its contents to
DVD, reformat and restore it, then it costs me 4 hours (equivalent to $40) but reduces the
chance of crashing to 3%.
Save, reformat, restore?
Crash?
Crash?
No
Yes
-240
0
-200
-40
Yes
p=0.03
Yes
p=0.1
Nop=0.9
Nop= 0.97
Replace disk?
-70
Yes
No
EU = 0.03*(-240)+0.97*(-40) = -46
EU = 0.10*(-200)+0.90*(0) = -20
EU = -70
Quiz question• You will be drilling a water well in your backyard, and
you have to decide where to dig it. If you just dig where you think it is best, there is a 40% chance you’ll hit water. If you hire a seismologist, the chances increase to 60% but it costs you 10K$. If you hire a water witch, the chance of hitting water is 50% and the cost is 1K$. If you get 50K$ for hitting water, what should you do
• Draw the decision tree• Evaluate alternatives• Indicate best choice• Put your name on the paper and hand it in.
You will be drilling a water well in your backyard, and you have to decide where to dig it. If you just dig where you think it is best, there is a 40% chance you’ll hit water. If you hire a seismologist, the chances increase to 60% but it costs you 10K$. If you hire a water witch, the chance of hitting water is 50% and the cost is 1K$. If you get 50K$ for hitting water, what should you do?
Water?
Water?SeismologistCost 10K
EU=20
Nothing
Cost 0$
EU=20
49K$
-10K$
40K$
-1K$
Yes
p=0.4
EU=20
Yes
p=0.6
EU=24
Nop=0.4EU=-4
Nop= 0.5
EU=-0.5
Detector?
50K$
Water witch
cost 1K$
EU=24
Water?Nop= 0.6EU=0
Yes
p=0.5
EU=24.5
0