Questions tagged [pareto-efficiency]

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.

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Quasilinear Utility: Pareto Optimality Implies Total Utility Maximization?

I read that if we have quasilinear utility for all consumers, then any pareto optimal allocation maximizes the sum of utility levels of all consumers. That is: $\textbf{What we know:}$ $$1)\quad u^i(...
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2answers
142 views

If the government builds a bridge, how do we know it's the best possible usage of real resources (i.e. steel, labor, etc) at the time?

I would assume the "goal" of any economic activity is to make the largest amount of people the "happiest" -- i.e. Pareto Efficiency or sum-total 'utility.' How do we know if this ...
3
votes
2answers
648 views

Pareto optimality and Externalities

Let's consider 5 farmers, each of them has 2 cows to put into the field. So every farmers can put 0,1 or 2 cows. I denote the three stategies by $q_i$, i=0,1,2. Now, the payoffs ( i.e. the amout of ...
5
votes
1answer
442 views

Converting word definitions of Pareto-Optimal into math symbols

I'd like to have a mathematical version of the following two definitions just because I remember symbols better than words. But I lack the math prowess to convert them from words to symbols. Can ...