Subjective expected utility

The value - expectancy theory is a psychological theory of action (See Instrumentalitäts valence - expectancy- theory ), which can be attributed to the rational choice approach. The basic idea of this theory is:

The value - expectancy theory starts from six assumptions:

• Every action is a choice between alternatives
• Every action has consequences
• The consequences are evaluated by the actor
• The consequences occur with different probabilities on ( the actor: Expectations )
• Action alternatives are an evaluation ( or weighting ) subjected ( " WE- weight " )
• There is always the selected action alternative, the " WE- weight " is maximum.

History

The foundations were laid by the philosopher Jeremy Bentham and the statistician Daniel Bernoulli in the 18th century. While Bentham introduced the concept of benefit in economic thinking, comes from the Bernoulli assumption that that alternative is selected, the expected value is the highest.