Information about Expectation Utilities
A qualification introduced by Bentham, to distinguish between two different types of utilities, or, rather, sources of utility (for utility, being identical to pleasure, remains always qualitatively the same). Expectation utilities are future-regarding, and thus imply desires and beliefs; "natural" utilities are not. Expectation utilities allow for long-term projects, which provide a higher proportion of utility than the natural utilities favored by those agents that can only pursue their immediate interest.
The notion of 'expectation utility' must not be mistaken for that of expected utility.
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The notion of 'expectation utility' must not be mistaken for that of expected utility.
Jeremy Bentham (IPA: ['benθəm]) (26 February [O.S. 15 February 15] 1748) – June 6, 1832) was an English jurist, philosopher, and legal and social reformer.
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In economics, utility is a measure of the relative satisfaction or desiredness from consumption of goods. Given this measure, one may speak meaningfully of increasing or decreasing utility, and thereby explain economic behavior in terms of attempts to increase one's utility.
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The expected utility hypothesis is the hypothesis in economics that the utility of an facing uncertainty is calculated by considering utility in each possible state and constructing a weighted average. The weights are the agent's estimate of the probability of each state.
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