Utility theory

Utility theory is a concept in economics and decision-making that helps explain how individuals evaluate choices based on their preferences and satisfaction. Essentially, it suggests that people make decisions to maximize their "utility," or overall happiness and wellbeing. Each option is assigned a value based on how much satisfaction it provides. This theory helps understand behaviors in various situations, such as spending money, investing, or choosing between different products, by showing that people weigh the potential benefits against their desires and needs before making a selection.