Subjective expected utility
Hey little buddy, do you know how sometimes we make decisions based on what we think will be the best outcome for us? That's called making a choice based on utility.
But sometimes we don't know all the information about the outcomes or we don't know exactly how much we will like or dislike them, right? Well, that's where subjective expected utility comes in.
Subjective means it's based on our own personal opinions and perceptions. And expected means we're guessing what we think will happen in the future.
So, subjective expected utility means that we try to make the best decision based on what we think will happen and how much we think we will like or dislike those outcomes. We use our own personal opinions and try to predict what will happen in the future in order to choose the option that gives us the most happiness or utility.
It's like if we had to choose between going to the pool or going to the park, but we don't know how sunny it will be or how crowded it will be. We try to think about what we like and don't like about each option, and we try to guess what will happen in order to choose the one that will make us happiest.
Does that make sense, little buddy?
But sometimes we don't know all the information about the outcomes or we don't know exactly how much we will like or dislike them, right? Well, that's where subjective expected utility comes in.
Subjective means it's based on our own personal opinions and perceptions. And expected means we're guessing what we think will happen in the future.
So, subjective expected utility means that we try to make the best decision based on what we think will happen and how much we think we will like or dislike those outcomes. We use our own personal opinions and try to predict what will happen in the future in order to choose the option that gives us the most happiness or utility.
It's like if we had to choose between going to the pool or going to the park, but we don't know how sunny it will be or how crowded it will be. We try to think about what we like and don't like about each option, and we try to guess what will happen in order to choose the one that will make us happiest.
Does that make sense, little buddy?