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According to von Neumann and Morgenstern's utility index, decisions are made to maximize Utility Measures and Utility Function expected utility expected monetary value expected marginal loss.
Von Neumann–Morgenstern utility function, an extension of the idea of consumer preferences that comes with a theory of behavior toward risk variance. It was put forth by John Neumann and Oskar Morgenstern in Theory of Games and Economic Behavior (1944) and arises from the expected utility hypothesis.
To maximize expected utility implies that the individual chooses the choice that yields the very best average utility, where average utility may be a probability-weighted sum of all utilities. This theory requires that the patron knows the probability of each outcome.
Expected utility, in decision theory, the mean of an action to an agent, calculated by multiplying the worth to the agent of every possible outcome of the action by the probability of that outcome occurring then summing those numbers.
The fundamental theorem of John von Neumann's scientific theory states that during a broad category of games it's always possible to search out an equilibrium from which neither player should deviate unilaterally. Utility function measures the preferences consumers apply to their consumption of products and services.
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