Dictionary

Glossary of game theory terms.

Pareto Efficient

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
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