Difference between revisions of "Expected utility"

From Lesswrongwiki
Jump to: navigation, search
m
Line 1: Line 1:
 
{{wikilink|Expected utility hypothesis}}
 
{{wikilink|Expected utility hypothesis}}
'''Expected utility''' is the [[expected value]] in terms of the [[utility]] produced by an action. Each possible consequence of the action is assigned a utility by a [[utility function]] and weighed by the probability of that outcome occurring. The sum of these weighed utilities is defined to be the action's expected utility.  
+
'''Expected utility''' is the [[expected value]] in terms of the [[utility]] produced by an action. It is the sum of the utility of each of its possible consequences, individually weighted by their respective probability of occurrence.  
  
 
Von Neumann and Morgenstern proved the [http://web.archive.org/web/20070221104329/http://www.econ.hku.hk/~wsuen/uncertainty/eu.pdf expected utility theorem], which says that when a rational agent chooses between different "gambles" (probability distributions over outcomes), the utility of such a gamble can always be seen as the expected utility of the gamble's outcome.
 
Von Neumann and Morgenstern proved the [http://web.archive.org/web/20070221104329/http://www.econ.hku.hk/~wsuen/uncertainty/eu.pdf expected utility theorem], which says that when a rational agent chooses between different "gambles" (probability distributions over outcomes), the utility of such a gamble can always be seen as the expected utility of the gamble's outcome.

Revision as of 03:06, 10 September 2012

Smallwikipedialogo.png
Wikipedia has an article about

Expected utility is the expected value in terms of the utility produced by an action. It is the sum of the utility of each of its possible consequences, individually weighted by their respective probability of occurrence.

Von Neumann and Morgenstern proved the expected utility theorem, which says that when a rational agent chooses between different "gambles" (probability distributions over outcomes), the utility of such a gamble can always be seen as the expected utility of the gamble's outcome.

Humans, of course, are a different story.

Blog posts

See also