Expected utility is
A)the maximum utility that a person can get from a set of possible outcomes.
B)the probability-weighted mean of the utility gained from a set of possible outcomes.
C)negative for risk-averse people.
D)indeterminant for risk preferring people.

Question

Quizplus · Accepted Answer

Expected utility is the probability-weighted average of the utility gained from a set of possible outcomes. It takes into account both the probability of each outcome occurring and the utility (or level of satisfaction) associated with each outcome. Options A, C, and D do not accurately describe expected utility.

Expected Utility Is