Utility, expected utility
The concept of utility enters economic analysis typically via the concept
of a utility function which itself is just a mathematical representation
of an individualīs preferences over alternative bundels of
consumption goods (or, more generally, over goods, services, and leisure).
If the individualīs preferences are complete, reflexive,
transitive, and continuous, then they can be represented by a continuous
utility function. In this sense, utility itself is an almost empty concept:
It is just a number associated with some consumption bundle. A general
treatment of the existence of an utility function is due to
Expected utility (von Neumann-Morgenstern utility):
An axiomatic extension of the ordinal concept of utility to uncertain payoffs.
An agent possesses a von Neumann-Morgenstern utility function if she ranks
uncertain payoffs according to (higher) expected value of her utility of the
individual outcomes that may occur.
rational (economic) behavior,