Utility functions are mathematical functions that transform monetary values - payoffs and costs - into ________________.
A) expected values
B) utility values
C) EMV values
D) anchor values
E) None of the above

Question

Quizplus · Accepted Answer

Utility functions transform monetary values into utility values, which represent a person's subjective satisfaction or happiness with the outcome. This is often used in decision-making under uncertainty to account for risk preferences and the diminishing marginal utility of money. The other options (A, C, D) are not correct as they do not reflect the purpose or outcome of utility functions.

Utility Functions Are Mathematical Functions That Transform Monetary Values -