Also, prospect theory is a utility theory. You compute a utility for each possible outcome associated with each action, add them up to compute the utility for each action, then choose the action with the highest utility. This is using a utility function. It is a special kind of utility function, where the utility for each possible outcome is calculated relative to some reference level of utility. But it’s still a utility function.
Every time someone thinks they have a knockdown argument against the use of utility functions, I find they have a knockdown argument against some special simple subclass of utility functions.
Also, prospect theory is a utility theory. You compute a utility for each possible outcome associated with each action, add them up to compute the utility for each action, then choose the action with the highest utility. This is using a utility function. It is a special kind of utility function, where the utility for each possible outcome is calculated relative to some reference level of utility. But it’s still a utility function.
Every time someone thinks they have a knockdown argument against the use of utility functions, I find they have a knockdown argument against some special simple subclass of utility functions.