A decision tree separates a choice from the uncertain events that follow it. Build the same outcome structure for both options, make each probability total 100 percent, and inspect the branch contributions before comparing expected values.
Each option has two mutually exclusive outcomes. Probabilities for each option must total 100 percent.
The result will validate both probability totals, show every weighted branch contribution, and compare the expected values.
Each branch contribution equals its probability multiplied by its outcome value. The two contributions for an option are added to produce its expected value. The builder does not fill missing probability, infer a likely outcome, or convert an average into a recommendation.
Use the same value unit and time horizon across all four outcomes. If one branch measures first-year profit and another measures five-year revenue, the sum has no stable meaning. When possible, describe one shared external condition, such as strong demand or weak demand, and estimate how each option behaves under it.
A launch-now option returns 120 under strong adoption with a 60 percent probability and loses 20 otherwise. Its branch contributions are 72 and negative 8, producing an expected value of 64. A pilot-first option returns 75 in either branch, producing 75. The pilot leads on the average, while the full launch retains the larger upside. A team that cannot absorb the negative branch should apply that constraint before comparing the averages.
For larger trees, first use the two-option decision tree guide to decide which uncertainty actually changes the choice. More branches are useful only when they represent distinct actions or consequences.
Understand branch probabilities, comparable outcomes, and why an expected value is not a guaranteed result.
Yes, within each option. The branches represent mutually exclusive outcomes for that option. If they do not total 100 percent, the expected value is incomplete or double counted, so the builder stops the calculation and shows the mismatch.
Learn the two-option decision tree methodThey can, but comparable structures are easier to interpret. Use the same external event when possible, such as strong demand or weak demand, then estimate how each option performs under it.
Build coherent scenarios for both optionsNo. Expected value is an average under the entered probabilities. A lower branch may still violate a cash, safety, or service requirement, and weak probability evidence can make the apparent lead fragile.
Calculate expected value with a downside check