DecisionTree.XLS Drawing and Calculating Decision Trees on a Microsoft Excel Spreadsheet
by John O. McClain    Links: [ Free Software | John McClain's Page | Errors ]   October 27, 2007

The diagram below shows a simple decision tree constructed using the macro contained in the Excel file DecisionTree.xls.

There are three kinds of Nodes: Decision, Probability and Terminal. Decision and Probability Nodes may have any number of branches leading out to other nodes of any type. However, a node may have at most one branch leading in. Formulas are used to choose the highest payoff branch out of a decision node and the expected payoff for a probability node.

Inputs include names for each node, probabilities on the branches that need them, and payoffs in the terminal nodes. These may be changed at any time by entering them directly on the spreadsheet.

Tree design is done with a macro. You simply right-click on the sheet, or click the “Change Model” button. A typical window is shown below. To use this macro, you must set your security level to medium or lower (see below).

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If it Doesn't Work:
Some users find that the macros do not work and do not appear in the Macro menu.
If this happens, Excel has automatically disabled the macros that make it run.
Instructions to fix this are included in the file, on a worksheet named Warning.

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Download: This is a very simple program, intended for teaching purposes. It includes three pages of instructions, with pictures. You are welcome to use it in any manner, and change it as you see fit. The program comes without any guarantee whatsoever, and is distributed free of charge.

Click Here  to get a free copy of the Microsoft Excel Spreadsheet.

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