>>Hm I don't follow. Could you please define "expected value in money terms" vs "expected value in utility of money terms" Imagine you have $10k to your name a

>>Hm I don't follow. Could you please define "expected value in money terms" vs "expected value in utility of money terms" Imagine you have $10k to your name and flip a coin for $1k. Your expected value in money terms is $9k * 0.5 + $11k * 0.5. Your expected value in utility terms is: u($9k) * 0.5 + u($11k) * 0.5 where u is a function that tells you how much worth you get from money. See wikipedia link for some explanation (although I think the articles are over-complicated and don't convey the point in clear way): https://en.wikipedia.org/wiki/Utility https://en.wikipedia.org/wiki/Utility https://en.wikipedia.org/wiki/Marginal_utility#Law_of_Diminishing_marginal_utility https://en.wikipedia.org/wiki/Marginal_utility#Law_of_Dimini... The key point is that utility is concave (a coin flip for any amount has negative utility) which is obvious when you think about it (better to be a millionaire than flip a coin to be busted or have 2 million net worth) but maybe not something most people think when making everyday decisions.