Which of the following best describes a decision tree?
A) A decision tree is a useful device for calculating probabilities.
B) A decision tree uses branches to represent both acts and states of nature.
C) The payoffs are shown at the end of branches of a decision tree.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

A) A decision tree is a useful device for calculating probabilities. 
This is true because decision trees can help calculate the probability of different events occurring based on the different choices or actions taken.

B) A decision tree uses branches to represent both acts and states of nature. 
This is true because decision trees typically start with a decision or choice and then show different possible outcomes or states of nature that can result from that decision. These different branches represent both the decision and the resulting state of nature.

C) The payoffs are shown at the end of branches of a decision tree. 
This is true because decision trees typically show the different possible outcomes or states of nature at the end of each branch, along with the expected payoffs or consequences of each.

Therefore, all of the choices are correct and the best answer is D.

Which of the Following Best Describes a Decision Tree