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This lecture explains Pareto efficiency, the primary way we compare the relative quality of outcomes in game theory. Takeaway Points. An outcome is Pareto efficient if there is no other outcome that increases at least one player’s payoff without decreasing anyone else’s.
Feb 7, 2020 · An outcome is said to be Pareto optimal if it cannot be Pareto dominated by any other outcome. To be specific on choosing a Pareto outcome, it is evident that no other outcome can prove to be better than this outcome for all the players. In addition to this, one player strictly chooses the Pareto optimal outcome over any other outcome.
In a state of Pareto Efficiency, resources are allocated in the most efficient way possible. Pareto efficiency is mathematically represented when there is no other strategy profile s' such that u i (s') ≥ u i (s) for every player i and u j (s') > u j (s) for some player j.
Pareto efficiency or Pareto optimality is a state of allocation of resources from which it is impossible to reallocate so as to make any one individual or preference criterion better off without making at least one individual or preference criterion worse off.
An outcome of a game is Pareto efficient if there is no other outcome that makes every player at least as well off and at least one player strictly better off. That is, a Pareto Optimal outcome cannot be improved upon without hurting at least one player.
