Humans don't. "Utility" is part of the map, not part of the territory. We make choices, but utility theory is only a modeling language used to describe choice-making processes.

One are of research you may want to investigate is "Revealed Preference", a concept developed primarily by Paul Samuelson.

"Revealed Preference" has issues, because of things like circular preferences - although it's a mistake to conclude that circular preferences are proof that humans are irrational. Rather, it demonstrates that utility theory in general is just a model, and an incomplete one.

The fundamental issue is that utility, as a model, attempts to compress a topography of many dimensions - human preferences - into a topography of exactly one - a utility value for each potential choice. Impossible Objects - "contradictions", such as circular preferences - are to be expected in the abbreviated topography.