  This article discusses expected utility theory as a normative theory—that is, a theory of how people should make decisions. In classical economics, expected utility theory is often used as a descriptive theory—that is, a theory of how people do make decisions—or as a predictive theory—that is, a theory that, while it may not accurately model the psychological mechanisms of decision-making, correctly predicts people's choices. Expected utility theory makes faulty predictions about people's decisions in many real-life choice situations (see Kahneman &amp; Tversky 1982); however, this does not settle whether people should make decisions on the basis of expected utility considerations.