Utilitarianism
Utilitarianism is a normative ethical theory that places the locus of right and wrong solely on the outcomes (consequences) of choosing one action/policy over other actions/policies. As such, it moves beyond the scope of one's own interests and takes into account the interests of others.

Bentham's Principle of Utility: (1) Recognizes the fundamental role of pain and pleasure in human life, (2) approves or disapproves of an action on the basis of the amount of pain or pleasure brought about i.e, consequences, (3) equates good with pleasure and evil with pain, and (4) asserts that pleasure and pain are capable of quantification (and hence 'measure').

In measuring pleasure and pain, Bentham introduces the following criteria: INTENSITY, DURATION, CERTAINTY (or UNCERTAINTY), and its NEARNESS (or FARNESS). He also includes its "fecundity" (will more of the same follow?) and its "purity" (its pleasure won't be followed by pain & vice versa). In considering actions that affect numbers of people, we must also account for its EXTENT.

John Stuart Mill adjusted the more hedonistic tendencies in Bentham's philosophy by emphasizing (1) It is not the quantity of pleasure, but the quality of happiness that is central to utilitarianism, (2) the calculus is unreasonable -- qualities cannot be quantified (there is a distinction between 'higher' and 'lower' pleasures), and (3) utilitarianism refers to "the Greatest Happiness Principle" -- it seeks to promote the capability of achieving happiness (higher pleasures) for the most amount of people (this is its "extent").

Act and Rule Utilitarianism

We can apply the principle of utility to either PARTICULAR ACTIONS or GENERAL RULES. The former is called "act-utilitarianism" and the latter is called "rule-utilitarianism."

Act-utilitarianism -- The principle of utility is applied directly to each alternative act in a situation of choice. The right act is then defined as the one which brings about the best results (or the least amount of bad results).

Criticisms of this view point to the difficulty of attaining a full knowledge and certainly of the consequences of our actions.
It is possible to justify immoral acts using AU: Suppose you could end a regional war by torturing children whose fathers are enemy soliders, thus revealing the hide outs of the fathers.
Rule-utilitarianism -- The principle of utility is used to determine the validity of rules of conduct (moral principles). A rule like promise-keeping is established by looking at the consequences of a world in which people broke promises at will and a world in which promises were binding. Right and wrong are then defined as following or breaking those rules.

Some criticisms of this position point out that if the Rules take into account more and more exceptions, RU collapses into AU.
More genearl criticisms of this view argue that it is possible to generate "unjust rules" according to the principle of utility. For example, slavery in Greece might be right if it led to an overall achievement of cultivated happiness at the expense of some mistreated individuals.

Source:
caae.phil.cmu.edu