Expected Utility Theory and Psychology

Kazuhisa Takemura
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Kazuhisa Takemura: Waseda University

Chapter Chapter 6 in Behavioral Decision Theory, 2021, pp 69-86 from Springer

Abstract: Abstract Expected utility theoryExpected utility theory is a major theory of decision making under riskDecision making under risk. Decision making under riskDecision making under risk is a type of decision-making in which the probabilityProbability distribution of the results is known. This expected utility theoryExpected utility theory is assumed in numerous theories of economics. Certainly, any student taking economics should have been taught it in a course of some kind. Expected utility theoryExpected utility theory is a major theory of decision making under riskDecision making under risk. Decision making under riskDecision making under risk is a type of decision-making in which the probabilityProbability distribution of the results is known. This expected utility theoryExpected utility theory is assumed in numerous theories of economics. Certainly, any student taking economics should have been taught it in a course of some kind. The history of expected utility theoryUtility theory is long; it had already been proposed in the eighteenth century and is closely related to psychology constituting the origin of behavioral decision theoryBehavioral decision theory. This chapter first explains the basic idea of the initial expected utility theoryExpected utility theory and then, and how this theory is related to psychological theories. Subsequently, psychological studies of utility measurementUtility measurement based on expected utility theory will be introduced in the final part.

Keywords: Expected utility theory; St. Petersburg paradox; Utility measurement; Psychophysics (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-5453-4_6

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DOI: 10.1007/978-981-16-5453-4_6

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