# Difference between revisions of "Expected utility"

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'''Expected utility''' is the [[expected value]] of a [[utility function]]. | '''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. | + | 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. |

Humans, of course, are a different story. | Humans, of course, are a different story. |

## Revision as of 19:20, 7 January 2011

**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.

## Blog posts

##### By Stuart Armstrong:

- Extreme risks: when not to use expected utility
- Expected utility without the independence axiom
- Money pumping: the axiomatic approach
- In conclusion: in the land beyond money pumps lie extreme events