Savage's subjective expected utility theory

Savage's subjective expected utility theory explains how rational individuals make decisions under uncertainty. It suggests that people assign personal probabilities to uncertain outcomes based on their beliefs, and then choose the option that offers the highest "expected utility"—a measure of value that accounts for both the desirability of outcomes and their likelihood. In essence, individuals weigh potential results by how likely they think they are, and pick the choice that maximizes their overall satisfaction or benefit, reflecting a consistent and rational approach to decision-making under uncertainty.