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Hypothesis that the subjective value of a gamble is the statistical expectation of one’s valuations of the gamble’s outcomes
The expected utility hypothesis is a foundational assumption in mathematical economics concerning decision making under uncertainty. It postulates that rational agents maximize utility, meaning the subjective desirability of their actions. Rational choice theory, a cornerstone of microeconomics, builds this postulate to model aggregate social behaviour. The expected utility hypothesis states an ag... Wikipedia