A blog from the Maltese Islands (Malta, Gozo, Comino)
A map of sequential decision-making process.
Designed for analysing decision problems that involve a series of choice alternatives that are constrained by previous decisions.
They illustrate the complete range of future possibilities and their associated probabilities in terms of a logical progression from an initial decision point, through each subsequent constrained decision alternative, to an ultimate outcome.
Widely employed because many important decisions are not made at one point in time, but rather in stages.
Subsequent determinations depend on prior judgements.
Sequence of events can be mapped out to visually resemble the branches of a tree.
Because demand probabilities are known, the expected value of cash flow can be determined.
Risk and expected return differentials can be incorporated into the decision-making process.