CONSTRUCTING DECISION TREES - cont.

• • Step 3: Terminate Each Branch in a Node - The right end of each branch must terminate in one of the three types of nodes (decision, chance, or payoff). To determine which type is needed, we ask, "If we proceed along this branch, are we next confronted with another decision, or an event over which we have no control?" If we are confronted with another decision, we terminate that branch with a decision node and go to Step 4a. If we are confronted with an event over which we have no control, we terminate that branch with a chance node and go to Step 4b. If we are not confronted with a decision or an event, we terminate that branch with a payoff node and go to Step 4c.

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