Belief-consistent Pareto dominance

The classic Pareto criterion claims that all voluntary trades, even on the grounds of heterogeneous beliefs, should be encouraged. I argue that a trade without hope for Pareto improvement remains controversial. I introduce and characterize a notion of belief-consistent Pareto dominance to formalize...

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Veröffentlicht in:	Economic theory bulletin 2020-10, Vol.8 (2), p.219-229
1. Verfasser:	Qu, Xiangyu
Format:	Artikel
Sprache:	eng
Schlagworte:	Belief & doubt Beliefs Dominance Economic theory Economic Theory/Quantitative Economics/Mathematical Methods Economics Economics and Finance Game Theory Heterogeneity Humanities and Social Sciences Macroeconomics/Monetary Economics//Financial Economics Pareto optimum Public Finance Research Article Social and Behav. Sciences
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Zusammenfassung:	The classic Pareto criterion claims that all voluntary trades, even on the grounds of heterogeneous beliefs, should be encouraged. I argue that a trade without hope for Pareto improvement remains controversial. I introduce and characterize a notion of belief-consistent Pareto dominance to formalize this argument, which, in addition to unanimity of preferences, requires all rankings in a trade to be supported by some common beliefs that must coincide with the agents’ beliefs about the events on which all agents agree.
ISSN:	2196-1085 2196-1093
DOI:	10.1007/s40505-019-00178-0