Final answer:
Expected utility is the value or satisfaction an individual expects to derive from a decision. The main axioms of utility theory include completeness, transitivity, continuous preference, and independence of irrelevant alternatives.
Step-by-step explanation:
Expected utility is a concept in economics that refers to the value or satisfaction an individual expects to derive from the outcome of a decision or action. It combines the subjective preferences and probabilities associated with different outcomes to determine the overall expected value. The main axioms, or principles, of utility theory include completeness, transitivity, continuous preference, and independence of irrelevant alternatives.
Completeness implies that individuals can rank all possible outcomes, transitivity means that if an individual prefers A over B and B over C, then they also prefer A over C. Continuous preference refers to the assumption that individuals can express preferences between different quantities of goods or outcomes. Finally, the independence of irrelevant alternatives axiom states that individuals' preferences should not be influenced by outcomes that are not directly related to the decision at hand.