Normative Theories of Rational Choice: Expected Utility
Updated 2026-09-10
INTRODUCTION
English translation pending.
CORE DEFINITION
Expected utility theory is the normative theory of how to choose rationally under uncertainty: majoring in biology may bring a high salary or unemployment and debt, and seeing a doctor may catch a disease early or waste money. Its basic maxim is to choose the act with the highest expected utility. Representation theorems show that preferences satisfying certain axioms behave as if maximizing a utility and probability function.
SCAFFOLDING EFFECT
Reduce cognitive load
- Decision calculation: weight the utility of each outcome by its conditional probability and sum, to compare candidate acts side by side. - Preference self-check: use the axioms to test whether your own preferences can be represented by some utility and probability function.
Anchor fast decisions
Expected utility is the weighted sum of outcome utilities by their conditional probabilities: for each act, multiply the probability of the world being in each state under that act by the utility of the corresponding outcome, then sum. Representation theorems show that as long as preferences satisfy certain axioms, the agent's choices amount to maximizing a combination of a utility and a probability function.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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Source support: Explicit
- plato.stanford.eduhttps://plato.stanford.edu/entries/rationality-normative-utility/verified
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