Difference between revisions of "Expected utility"

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{{wikilink|Expected utility hypothesis}}
 
{{wikilink|Expected utility hypothesis}}
  
"Expected utility" just means the [[expected value]] of a [[utility function]].
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'''Expected utility''' is the [[expected value]] of a [[utility function]].
  
Von Neumann and Morgenstern proved the [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.
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Von Neumann and Morgenstern proved the [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.
  
 
Humans, of course, are a different story.
 
Humans, of course, are a different story.
  
==See Also==
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==See also==
* [[Allais paradox]]
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* [[prospect theory]]
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*[[Allais paradox]]
* [[decision theory]]
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*[[Decision theory]]
* [[instrumental rationality]]
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*[[Instrumental rationality]]
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*[[Prospect theory]]
  
 
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[[Category:Concepts]]

Revision as of 08:23, 29 August 2009

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Expected utility is the expected value of a utility function.

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.

See also