Definition of expected utility in US English:

expected utility


Economics Mathematics
  • A predicted utility value for one of several options, calculated as the sum of the utility of every possible outcome each multiplied by the probability of its occurrence.

    • ‘Kitcher gives this claim some rigour by putting idealized, but reasonable, values on the probabilities and expected utilities of different strategies in the search for truth.’
    • ‘One way to view this difference is that agents who correlate their strategies exogenously can calculate their expected utilities conditional on their own strategies.’
    • ‘Roemer argues that if individuals maximize their expected utility on the insurance market, they insure against states in which they have low marginal utility.’
    • ‘This is the key insight of expected utility theory - expected values and expected utility do not rank alternative gambles the same way.’
    • ‘The first column under each simulation indicates how the expected utility of smuggling drugs changes as the value of the key policy variable is manipulated.’