Expected utility

long-run average value of a random variable

hypothesis that the subjective value of a gamble is the statistical expectation of one’s valuations (which may differ from dollar values) of the gamble’s outcomes

in decision theory, the attractiveness of an economic opportunity as perceived by a decision-maker in the presence of risk

philosophical thought experiment: “A mugger, who forgot his weapon, proposes a deal to Pascal: ‘you give me your wallet, and I will give you N times the money, where N is large enough to compensate for the low probability of me honoring the deal’”

preference in decision theory and economics of known risks to unknown risks