Let's start with a simple example, and explain how decision trees are used to value investment alternatives. Suppose you are trying to decide between starting two types of businesses: a lemonade ...

Decision trees are a simple but powerful prediction method. Figure 1: A classification decision tree is built by partitioning the predictor variable to reduce class mixing at each split. Figure 2 ...

Decision Trees in Finance. ... For example, if you are trying to decide whether to buy a piece of machinery, your actions might be to buy a new machine, buy a used machine, ...

Decision trees are at their heart a fairly simple type of classifier, and this is one of their advantages. Decision trees are constructed by analyzing a set of training examples for which the ...

Doubt & Decision Trees. When faced with a seemingly low-probability proposition, its natural to feel doubt. ... With our camping example, there were some simple things we could do.