Utility functions are mathematical functions that transform monetary values - payoffs and costs - into ____.
A) expected values
B) utility values
C) EMV values
D) anchor values
E) none of these choices

Question

Quizplus · Accepted Answer

Utility functions transform monetary values into utility values, which represent a person's subjective satisfaction or well-being. The main goal of decision-making using utility theory is to maximize expected utility rather than expected value or EMV. Therefore, the correct answer is B.

Utility Functions Are Mathematical Functions That Transform Monetary Values -