Question
In decision trees, EMVs are calculated through which type of process? "Pay it forward" "Going forward" "Folding back" "Historical evaluation"
Ask by Frazier Joseph. in the United States
Mar 10,2025
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Answer
EMVs in decision trees are calculated through the process of **folding back**.
Solution
1. First, recall that EMV (Expected Monetary Value) is calculated in decision trees by working backwards from the final outcomes.
2. This process involves starting at the terminal nodes (which contain the payoffs) and then backing up through the tree, calculating the expected values at each decision node recursively.
3. This method of working backwards is known as "folding back".
4. Therefore, the correct answer is: **Folding back**.
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In decision trees, Expected Monetary Values (EMVs) are calculated through a "Folding back" process. This method involves starting from the final outcomes of the decision tree and working backwards to calculate the value at each decision node, taking into consideration the possible outcomes and their associated probabilities. It's like unfolding a mystery, where you peel back layers to reveal the best path! "Folding back" is crucial because it allows decision-makers to visualize all potential scenarios and their monetary implications. By assessing the tree this way, one can smarter navigate complex decisions—turning indecision into well-informed choices in no time!
