Final answer:
Expected Value theory suggests that individuals aim to make decisions that maximize their utility, not minimize expected value.
Step-by-step explanation:
According to Expected Value theory, when making a decision, such as a travel decision, an individual aims to maximize their utility by selecting the option with the greatest perceived benefit relative to cost. This means that contrary to the student's assertion, individuals do not look to minimize their expected value but rather seek to maximize their utility. As such, if an individual perceives the benefit of traveling as exceeding the cost, they will likely make the decision to travel.
In more technical terms, rational consumers make purchase decisions based on the principle that they will continue to buy more of a product as long as the marginal utility of an additional unit is greater than the opportunity cost. For instance, when considering whether to purchase bus tickets, a consumer like Alphonso will evaluate the diminishing marginal utility of each additional ticket against the increasing opportunity cost (sacrificing other goods like burgers). Alphonso will stop buying more bus tickets once the opportunity cost equates to or exceeds the marginal utility of the bus tickets.
This concept does not imply that individuals are constantly calculating utilities in their everyday decisions. Instead, it suggests that people naturally seek their own satisfaction and will attempt to obtain the best possible outcome given their budget constraints.