Expected Utility Theory

A decision‑theoretic model for choices under risk in which an agent's preferences over lotteries (probabilistic outcomes) are represented by the expectation of a utility function; agents choose the option with the highest expected utility, subject to the theory's axioms (completeness, transitivity, independence, continuity).

A formal decision model in which an agent's preferences over risky prospects are represented by a utility function such that the agent is presumed to prefer lotteries with higher expected utility; under the von Neumann–Morgenstern axioms (completeness, transitivity, continuity, independence) preferences admit an expected‑utility representation and rational choice reduces to maximizing expected uti