Investopedia

Continue to Site »

Pareto Efficiency

Filed Under » , , , ,
Dictionary Says

Definition of 'Pareto Efficiency'

An economic state where resources are allocated in the most efficient manner. Pareto efficiency is obtained when a distribution strategy exists where one party's situation cannot be improved without making another party's situation worse. Pareto efficiency does not imply equality or fairness.

Also known as "Pareto optimality."
Investopedia Says

Investopedia explains 'Pareto Efficiency'

Pareto efficiency has broad implications in economics, particularly in game theory. Unlike the predicted logical outcome of a prisoner's dilemma (participants choose selfishly and do not achieve the best possible outcome), if an economic state is Pareto efficient, individuals are maximizing their utility. The final allocation decision cannot be improved upon, given a limited amount of resources, without causing harm to one of the participants.

Articles Of Interest

  1.

    Investing In Oil And Gas UITs

    Unit investment trusts provide direct exposure to the energy sector, fueling better returns.

  2. The Austrian School Of Economics

    If you think economists are only concerned with numbers, check out this group, who are more like economic philosophers.

  3. Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.

  4. Beeronomics: Factors Affecting Your Pint

    Beer is a complex beverage shaped by supply and demand, production and distribution, with regulation thrown in for that extra kick.

  5. Free Financial Counseling Programs For Students

    Learning to manage your money is no easy task, but there are plenty of resources designed especially to help.

  6. Financial Designations That Employers Require

    We break down the designations that are important to have if you want to work in the financial sector.

  7. Is The Gold Pain Over?

    After falling more than 13%, gold has staged a rebound but is that for fundamental reasons or the work of value investors? Will gold reward investors who didn't give up or is there more pain ...

  8. Should You Get A CFA, MBA Or Both?

    These certifications require time and money, but combined programs are making obtaining both designations more realistic.

  9. Quants: The Rocket Scientists Of Wall Street

    Blend math, finance and computer skills to command a high - and well deserved - salary.

  10. Pass Your CFA Exams On The First Try

    Become one of the elite who pass these exams by using these simple study methods.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center