Decision analysis and decision tree methodology MCQs With Answer

Decision analysis and decision tree methodology are essential tools in pharmacoepidemiology and pharmacoeconomics, enabling M.Pharm students to evaluate clinical and policy choices where outcomes are uncertain. This blog presents carefully designed multiple-choice questions to reinforce concepts such as decision nodes, chance nodes, expected value and expected utility calculations, incremental cost-effectiveness, dominance rules, sensitivity analyses (one-way, multi-way, probabilistic), and value-of-information approaches. Emphasis is placed on practical interpretation of decision trees, model structure, time horizon, discounting, QALYs, and choice of modelling frameworks (decision trees vs Markov models). These MCQs, with answers, help build analytical skills required for designing and critically appraising economic evaluations and decision-analytic studies.

Q1. What best defines decision analysis in health economics?

• An iterative statistical test for clinical trials
• A method of comparing healthcare strategies using probabilities, outcomes, and values
• A qualitative approach to stakeholder interviews
• A form of laboratory assay for drug interactions

Correct Answer: A method of comparing healthcare strategies using probabilities, outcomes, and values

Q2. Which shape in a decision tree represents a decision node?

• Circle
• Triangle
• Square
• Diamond

Correct Answer: Square

Q3. In decision tree terminology, what does a chance node indicate?

• A point where the decision maker chooses an action
• A point where probabilistic events determine outcomes
• A final outcome with no further branches
• A loop representing cyclic events

Correct Answer: A point where probabilistic events determine outcomes

Q4. What is a terminal node in a decision tree?

• The node where probabilities are assigned
• The root decision point
• An ending point representing an outcome with its associated cost and effect
• A node used for sensitivity analysis

Correct Answer: An ending point representing an outcome with its associated cost and effect

Q5. How is the expected value of a chance node calculated?

• By multiplying the highest payoff by the number of branches
• By summing the payoffs for all branches without weights
• By summing the products of each outcome’s probability and its payoff
• By taking the average of all payoffs regardless of probability

Correct Answer: By summing the products of each outcome’s probability and its payoff

Q6. What does rollback (backward induction) involve in decision tree analysis?

• Starting from the root and expanding branches forward
• Simulating patient cohorts over time using Markov cycles
• Calculating expected values from terminal nodes back to the root to identify optimal choices
• Randomizing treatment assignments in a trial

Correct Answer: Calculating expected values from terminal nodes back to the root to identify optimal choices

Q7. What is the formula for the incremental cost-effectiveness ratio (ICER)?

• (CostA + CostB) / (EffectA + EffectB)
• (EffectA – EffectB) / (CostA – CostB)
• (CostA – CostB) / (EffectA – EffectB)
• (CostA – CostB) × (EffectA – EffectB)

Correct Answer: (CostA – CostB) / (EffectA – EffectB)

Q8. When is a health intervention considered ‘dominant’ in economic evaluation?

• When it is more costly and less effective than the comparator
• When it is equally effective but more costly
• When it is both more effective and less costly than the comparator
• When it has a lower ICER than the comparator regardless of cost and effect

Correct Answer: When it is both more effective and less costly than the comparator

Q9. What describes extended dominance (also called weak dominance)?

• A strategy is better than all alternatives at every probability
• A strategy is less efficient than a combination (linear mix) of two other strategies
• A strategy with the lowest absolute cost is always chosen
• A dominated strategy that is strictly worse in both cost and effect

Correct Answer: A strategy is less efficient than a combination (linear mix) of two other strategies

Q10. How is a QALY (quality-adjusted life year) defined?

• The number of years of life without adjustment for quality
• A year of life weighted by a utility value representing quality of life
• An economic cost unit used in budget impact analyses
• The ratio of cost to life years gained

Correct Answer: A year of life weighted by a utility value representing quality of life

Q11. Why is discounting applied in economic evaluations?

• To increase future costs and outcomes relative to present values
• To adjust future costs and outcomes to their present value because people prefer benefits now to later
• To convert costs from local currency to international dollars
• To standardize utility values across studies

Correct Answer: To adjust future costs and outcomes to their present value because people prefer benefits now to later

Q12. What is a one-way sensitivity analysis?

• Analyzing the effect of changing one parameter at a time while holding others constant
• Varying all parameters simultaneously using probability distributions
• Comparing multiple strategies using bootstrap resampling
• Running a full Markov microsimulation for each patient

Correct Answer: Analyzing the effect of changing one parameter at a time while holding others constant

Q13. What characterizes probabilistic sensitivity analysis (PSA)?

• Assigning point estimates only and performing threshold tests
• Using probability distributions for parameters and Monte Carlo simulation to propagate uncertainty
• Performing deterministic one-way analyses for each parameter
• Excluding uncertainty in costs but including uncertainty in effects only

Correct Answer: Using probability distributions for parameters and Monte Carlo simulation to propagate uncertainty

Q14. What is the primary purpose of value-of-information (VOI) analysis?

• To calculate drug prices using demand curves
• To estimate the monetary value of perfect or partial information to reduce decision uncertainty
• To determine the clinical efficacy of an intervention in trials
• To perform budget impact analysis for payers

Correct Answer: To estimate the monetary value of perfect or partial information to reduce decision uncertainty

Q15. Which expression represents the net monetary benefit (NMB)?

• Cost – (WTP × Effect)
• (WTP × Effect) – Cost
• Effect / Cost
• Cost × Effect

Correct Answer: (WTP × Effect) – Cost

Q16. When is a decision tree typically preferred over a Markov model?

• For long-term chronic conditions with recurrent events
• For short-term, one-off decisions with limited number of events and branches
• When individual heterogeneity and history are crucial
• For modelling continuous time-to-event hazards requiring state transitions

Correct Answer: For short-term, one-off decisions with limited number of events and branches

Q17. Expected utility theory in decision analysis implies which principle?

• Decision makers maximize expected utility, not just expected monetary value
• Decision makers always prefer the option with the highest variance
• Decisions are made by minimizing clinical outcomes
• Utilities are ignored when costs are prioritized

Correct Answer: Decision makers maximize expected utility, not just expected monetary value

Q18. What constitutes structural uncertainty in a decision-analytic model?

• Random variation in parameter estimates due to sampling error
• Uncertainty about model structure, pathways, health states, or time horizon assumptions
• Measurement error in unit costs only
• Known probabilities of chance node outcomes

Correct Answer: Uncertainty about model structure, pathways, health states, or time horizon assumptions

Q19. If a new intervention is more costly and less effective than the standard care, how is it classified?

• Cost-effective with a favorable ICER
• Dominated by the standard care
• Subject to extended dominance only
• Preferred because higher cost implies better quality

Correct Answer: Dominated by the standard care

Q20. What is the aim of threshold analysis in decision models?

• To identify the parameter value(s) at which the preferred strategy changes
• To convert probabilistic sensitivity analysis into deterministic results
• To exclude dominated strategies from incremental analysis
• To estimate population prevalence from trial data

Correct Answer: To identify the parameter value(s) at which the preferred strategy changes

Download