Expected Utility Calculator

Written by Great Medico

Updated September 25, 2026 •2 min read

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A precise investment result is only as useful as the assumptions behind it. Expected Utility Calculator makes the calculation explicit so the inputs can be challenged before the output is trusted.

What this calculator does

Expected Utility Calculator combines possible monetary outcomes, their probabilities, and the risk-aversion coefficient into the calculator’s CRRA/log expected-utility measure. Its scope is intentionally narrow: the calculation follows the visible inputs and does not pretend to include financial variables the calculator never asks you to provide.

How to use it

Enter Possible monetary outcomes, Outcome probabilities (%), and Risk-aversion coefficient. Keep percentage assumptions in the units shown on the form and make sure the time unit of rates matches the term or period count. Before using the result in a decision, recheck unusually large or negative values against the source data rather than assuming the calculator is correcting an inconsistent input.

How the calculation works

For risk-aversion coefficient a = 1, utility is ln(outcome). Otherwise the CRRA utility used here is [outcome^(1−a) − 1] ÷ (1−a). Expected utility is the probability-weighted average across scenarios; monetary outcomes must remain positive for this formulation.

Example

With outcomes 80, 100, 160, probabilities totaling 100%, and risk aversion 1, the expected monetary outcome is 114, while the CRRA/log expected utility is about 4.701543.

How to interpret the result

Interpret the result as a modeled finance quantity, not a forecast or recommendation. Returns, rates, correlations, cash flows, fees, taxes, and market prices can change, so the most useful practice is to test a range of plausible inputs rather than treating one scenario as certain.

Limitations and notes

Expected utility depends on the utility function and the chosen risk-aversion coefficient, not only on the monetary outcomes. Different utility specifications can rank the same choices differently. Outcomes must be positive for this CRRA/log implementation, and the result has no natural currency unit.