Lecture 7: Pareto Optimality
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MIT 14.04 Intermediate Microeconomic Theory, Fall 2020Instructor: Prof. Robert TownsendUploaded 31-08-22View the complete course: https://ocw.mit.edu/courses/14-04-intermediate-microeconomic-theory-fall-2020/YouTube Playlist: https://www.youtube.com/watch?v=XSTSfCs74bg&list=PLUl4u3cNGP63wnrKge9vllow3Y2OOOKqFHow do we divide the social pie of the available resources in an economy across its household members? Economists have a way of figuring out what allocations of consumption bundles are efficient, or what allocations are not. Crucially, this is different from taking a stand on the appropriate distribution of income. Confusion on this subject, equity vs. efficiency, abounds in the popular press. An application is discussed: The Pareto optimal allocation of risk implemented with risk sharing rules – who gets what when there are adverse shocks.License: Creative Commons BY-NC-SAMore information at https://ocw.mit.edu/termsMore courses at https://ocw.mit.eduSupport OCW at http://ow.ly/a1If50zVRlQWe encourage constructive comments and discussion on OCW’s YouTube and other social media channels. Personal attacks, hate speech, trolling, and inappropriate comments are not allowed and may be removed. More details at https://ocw.mit.edu/comments.
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