[arianon]

> Is there something I'm missing in the use of the word "utility"?

Vitalik uses the word "utility" the same way (mainstream) economists do: A numeric estimation of the satisfaction, pleasure, benefit, advantage, or happiness given by an increase in wealth.

What you're calling out is that the concept itself is problematic: as you pointed out, the assumption of log-utility of wealth is not entirely accurate because, in reality, increments in wealth have diminishing utility.

There are other limitations with the idea, for example, is it possible to capture in a utility function the well-accepted notion that losing a given amount of money is more painful than it is pleasurable to gain it? Or that receiving a small amount of money now may have much more utility than receiving a large amount of it in the future? Maybe, maybe not, but this is how economists attempt to capture and quantify human behavior regarding our wants and needs for wealth, inadequate as it is.