Decision Tree
Categories: Financial Theory, Education
Money may not grow on trees, but decisions apparently do.
Actually, this one has more in common with a phone tree or a family tree than it does with a birch or an oak. The decision tree provides a visual representation of the cascading consequences of a particular choice.
In terms of the look of a decision tree, a family tree provides a good comparison. You've got great-grandma and great-grandpa having kids. And then each of their kids has kids, etc. As it goes down the generation, the branches multiply. Similarly, with a decision tree, the future decisions branch off from the current decision.
The decision tree provides a way to formalize the selection process, allowing executives to conceptualize the future decisions that the current choice will create.