Subjective expected utility: Difference between revisions

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'''Subjective expected utility''' is a method in [[decision theory]] in the presence of [[risk]] orginallyoriginally put forward by [[L. J. Savage]] in [[1954]]. It combines two distinct [[subjective]] concepts: a personal [[utility]] function and a personal [[probability]] analysis based on [[Bayesian probability]] theory.

If you believe an uncertain event has possible outcomes <math>\{x_i\}</math> each with a utility to you of <math>u(x_i)</math> and where you believe that the probability of each outcome is <math>P(x_i)</math>, then your subjective expected utility will be