In decision science, “utility” refers to a quantitative measure representing an individual’s preference or satisfaction with respect to a particular outcome. In this framework, utility is distinguished from “value,” which denotes the inherent worth or desirability of something (such as the monetary value, or just a money amount). Utility refers to a subjective assessment of value and varies from person to person.
For instance, two individuals might assign different utilities to the same outcome based on their unique preferences or circumstances. Utility is central to expected utility theory, where decisions are made by comparing the expected utilities of different outcomes, rather than simply their values. This allows for more nuanced decision-making, accounting for factors such as risk aversion or personal priorities.
Utility as used in decision science should not be confused with utilitarianism, the moral philosophical idea that actions should be assessed by the extent to which they lead to the greatest good for the greatest number. Utility is purely about subjective individual preference and is only about the greater good to the extent that decision makers attach value to such outcomes.
Historically, in the context of decision science, utility was central to the concept of marginal utility as a way to explain why, rationally, the value of money itself changes relative to how much money one has already accumulated ($1000 has far more utility to a person with $100 to their name than to a person with $1 million to their name).
See the Wikipedia entry on utility for a more detailed consideration of the term. See the glossary entry on marginal utility for more on the history of the concept in decision science. See the glossary entry on expected utility for an extension of the idea of utility to decisions under riskDecisions can be categorized based on the amount and nature of information available and decision scientists have developed somewhat standard definitions of the terms "risk",... and uncertainty, including to gambling.