The expected utility theory highlights
A) payoff and probability.
B) cost and benefits.
C) input and output.
D) rationality and irrationality.

Question

Quizplus · Accepted Answer

The expected utility theory focuses on making decisions based on balancing the payoff (utility) and the probability of different outcomes. This means that the best choice will be the one that has the highest expected utility, which takes into account both the potential benefits and the likelihood of receiving them. Therefore, choice letter A, which mentions payoff and probability, is the best answer.

The Expected Utility Theory Highlights