ECONOMICS

Detailed explanation-1: -The node generates a decision tree by using chi-square statistics (CHAID) to identify optimal splits. This use of CHAID can generate nonbinary trees, meaning that some splits have more than two branches. Target and input fields can be numeric range (continuous) or categorical.

Detailed explanation-2: -A decision tree represents a series of decisions, the alternatives to those choices, relevant states of nature, and the resulting payoffs or probabilities. The decision alternatives are first listed in a decision tree to give information about each alternative present.

Detailed explanation-3: -Decision trees provide an effective method of decision making because they: Clearly lay out the problem so that all options can be challenged. Allow us to analyze fully the possible consequences of a decision. Provide a framework to quantify the values of outcomes and the probabilities of achieving them.

Detailed explanation-4: -Decision trees can be divided into two types; categorical variable and continuous variable decision trees.