An efficiency standard based on the idea that the most efficient outcomes are those where no individual can be made better-off without making at least one other worse-off.
Questions tagged [pareto-efficiency]
138 questions
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Corner Solutions for Pareto Efficiency
I have been reviewing calculations to find walrasian equilibrium and pareto efficient allocations.
Assume we are in an environment with two consumers, $A$ and $B$, and two goods, $x$ and $y$. From this article in wikipedia, we have that a sufficient…
möbius
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Question on Pareto optimality problem
In an economy with two agents whose utility functions are
$$
U_A(x_1,x_2) = \alpha \cdot x_1 + x_2 \hskip 20pt U_B(y_1,y_2) = y_1 \cdot y_2.
$$
The given allocations are bundle (4,0) for A and bundle (1,5) for B.
Consider the following…
Praveen Varghese
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Pareto efficiency and maximization of sum of utilities
I'm trying to understand the relation between maximizing sum of utilities and finding Pareto efficient allocations. According to https://econ.ucsb.edu/~tedb/Courses/UCSBpf/pflectures/chap2.pdf (page 13), concavity plays an important role in whether…
PGupta
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Why is Pareto efficiency not always equitable or equilibrium?
Just for information. I think we can agree on that a Pareto optimal allocation is where you cannot put someone in a better position without making someone else worse off. I know that any competitive equilibrium is Pareto optimal, but any other form…
Guest
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How do we find pareto optimal points in a 2 goods simple exhange economy?
Suppose there are 2 individuals in a simple exchange economy with utilities $U_{1}= ax_{1} + x_{2}$ and $U_{2}= y_{1}y_{2}$.
Endowments are $(x_{1},x_{2})=(4,0)$ and $(y_{1},y_{2})=(1,5)$.
We are asked the values of $a$ such that the above…
Arshdeep
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Pareto optimality with Lagrange
I understand that you find the interior solutions for the pareto efficient set with Lagrange (Maximizing the utility with the endowment constraints and holding the other player's utility fixed)
How do I proceed with finding corner solutions with…
Maria
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Finding the Pareto optimal set with preferences for 3 individuals
Question: Let $N=\{1,2,3\}$ be a set of three people and $X=\{a,b,c,d\}$ a set of 4 political parties. The individuals have the following preferences:
Individual 1: $a \succ_1 b \sim_1 c \succ_1 d$
Individual 2: $d \sim_2 a \succ_2 c \succ_2…
jbrau
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Is this situation Pareto Optimal
"If either player is receiving his maximum payoff, then that outcome is Pareto optimal."
Is this True,False or Uncertain.
Solution: I guessed it false because we dont know the exact Utility function but there might be a situation where Y can…
Joa
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Are the marginal conditions for Pareto optimality sufficient?
In introductory microeconomics textbooks, it is argued that the following three conditions are necessary for the Pareto optimality;
Exchange Efficiency (MRS must be equal among all individuals)
Input Efficiency (MRTS must be equal among all…
kenji
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Finding Pareto efficiency with negative externalities
Student S has one hobby of listening to music. The noise of the speaker can produce noise up to 100 decibels (measured by D). Her money is measured by Ms . Her utility function is Us = 10D1/2 + Ms
Student F has a utility function of UF =…
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Efficiency conditions for externalities
I have a 2 consumer 2 goods economy. Both the goods produce an externality for the other consumer, therefore, they are a part of the other's utility function. How do I show that despite the externality, the equilibrium is efficient?
user708015
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In modern economics, what are the least restrictive conditions shown to theoretically achieve Pareto Efficiency?
In researching this question, I've come across plenty of sources that regurgitate intro econ textbooks that say markets equilibrate to Pareto efficiency in conditions of perfect competition (where specific and minimal definitions are also hard to…
B T
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$U=xy$ for all people in a small island, What are the pareto efficient allocations?
On a certain island there are only two goods, wheat and milk.The only
scarce resource is land. There are 1,000 acres of land. An acre of
land will produce either 16 units of milk or 37 units of wheat. Some
citizens have lots of land, some…
Shraddha
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