Long description

To the previous decision tree diagram (Figure 5) you now add the probabilities for each financial benefits.

Starting at the top and working down they are 0.7, 0.3 , 0.4, 0.6, 0.6, 0.4, 0.35 and 0.65.

So in total the decision tree has two branches, the top is for A and bottom is for B.

Following the top branch (for A) you come to a chance node called ‘win’, which then splits into two further branches, for the party, called J and K.

Each of these branches arrives at another chance node called ‘friendly’. Each f these has two further branches form each node, called ‘yes’ or ‘no’. This is repeated in the lower branch for B.

Now add the expected financial benefits. Starting at the top and working down they are £3 million, -£0.5 million, £0.5 million, -£2 million, £2.5 million, -£0.25 million, £1 million and -£1 million.

Now add the probabilities for each financial benefits. Starting at the top and working down they are 0.7, 0.3 , 0.4, 0.6, 0.6, 0.4, 0.35 and 0.65.

Now add the expected values at each of the four ‘friendly?’ chance nodes. Starting at the top they are £1.95 million, -£1 million, £1.4 million and -£0.3 million.

Now add the probabilities of each party winning (branching out of the two ‘win?’ chance nodes). From the top they are 0.55, 0.45, 0.3 and 0.7.

Then you add the expected values in the two ‘win?’ nodes, form the top they are £0.62 million and £0.21 million.