This chapter mainly talks about the decision-making model, through which we can make some decision-making analysis under uncertain circumstances to help us make better decisions. In the decision model, decision tree is the most important. The course uses decision trees to give several examples: for example, to buy a ticket, you only need 200 yuan at 3 o'clock, 400 yuan at 4 o'clock, and the probability of catching the 3 o'clock train in time is 40%. If you can't make it, buy an extra ticket at 3 o'clock, which means paying 200 yuan more. Through the decision tree, in the case of uncertainty, plan separately and draw a conclusion.

Other examples are investing, applying for scholarships, etc. But interestingly, we can infer our views on this probability through the decision tree, such as going home to see our parents. Through a round of calculation of the decision tree, we can know exactly how much we want to see our parents.

Decision tree model is widely used, and it is a tool and technology of project risk management that is often used by PMP (project management).

In PMP, it is called expected monetary value (EMV) analysis, which is a statistical method (analysis under uncertainty) to calculate the results when certain situations may or may not occur in the future. It can be seen that the decision tree is used based on uncertain factors. If the factor is determined, it is the information value mentioned in the next section.

Let's talk about an actual decision tree case.

Conditions: A project bidding is divided into two sections, A and B, and only one of them can be voted.

According to past experience, there are two bidding strategies for this project:

(1) bid is high, and the probability of winning the bid is 30%;

(2) Bidding, the probability of winning the bid is 50%;

So * * * has five strategies, A high bid, A low bid, B high bid, B low bid, no vote;

According to the statistics of project management, the profit and probability of each strategy are shown in the following table:

If bid A fails, the loss is 500,000 yuan, and bid B fails, the loss is 6,543,800 yuan+0,000 yuan.

So what is the higher return?

The decision tree model is analyzed as follows: