Named after Vilfredo Pareto, Pareto efficiency (or Pareto optimality)
is a measure of efficiency.
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. Often, a Nash Equilibrium
is not Pareto efficient implying that the players' payoffs can all be increased.
updated: 15 August 2005
HOW TO CITE THIS ENTRY
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- See news articles on normal-form games.