Nonlinear Prices in Nonconvex Economies with Classical Pareto and Strong Pareto Optimal Allocations

Positivity ◽  
2005 ◽  
Vol 9 (3) ◽  
pp. 541-568 ◽  
Author(s):  
Boris S. Mordukhovich
Keyword(s):  
Pareto Optimal ◽  
Optimal Allocations ◽  
Nonconvex Economies ◽  
Pareto Optimal Allocations

DON and Shapley Value for Allocation among Cooperating Agents in a Network: Conditions for Equivalence

2017 ◽  
Vol 5 (2) ◽  
pp. 143-161 ◽  
Author(s):  
Sridhar Mandyam ◽  
Usha Sridhar
Keyword(s):  
Social Welfare ◽  
Shapley Value ◽  
Centrality Measures ◽  
Pareto Optimal ◽  
Undirected Network ◽  
Social Welfare Maximization ◽  
Optimal Allocations ◽  
Game Theoretic ◽  
Cooperating Agents ◽  
Pareto Optimal Allocations

In a paper appearing in a recent issue of this journal ( Studies in Microeconomics), the authors explored a new method to allocate a divisible resource efficiently among cooperating agents located at the vertices of a connected undirected network. It was shown in that article that maximizing social welfare of the agents produces Pareto optimal allocations, referred to as dominance over neighbourhood (DON), capturing the notion of dominance over neighbourhood in terms of network degree. In this article, we show that the allocation suggested by the method competes well with current cooperative game-theoretic power centrality measures. We discuss the conditions under which DON turns exactly equivalent to a recent ‘fringe-based’ Shapley Value formulation for fixed networks, raising the possibility of such solutions being both Pareto optimal in a utilitarian social welfare maximization sense as well as fair in the Shapley value sense.

The Paradox of Vote Trading

1973 ◽  
Vol 67 (4) ◽  
pp. 1235-1247 ◽  
Author(s):  
William H. Riker ◽  
Steven J. Brams
Keyword(s):  
Stable Equilibrium ◽  
Pareto Optimal ◽  
External Cost ◽  
Optimal Allocations ◽  
Vote Trading ◽  
Pareto Optimal Allocations

Although, conventionally, vote trading in legislatures has been condemned as socially undesirable by both scholars and lay citizens, a recently popular school of scholarship has argued that vote trading improves the traders' welfare in the direction of Pareto-optimal allocations. This essay is an attempt to reconcile the disagreement by showing formally that vote trading does improve the position of the traders but that at the same time trading may impose an external cost on nontraders. In sum, it turns out that sporadic and occasional trading is probably socially beneficial but that systematic trading may engender a paradox of vote trading. This paradox has the property that, while trading is immediately advantageous for the traders, still, when everybody trades, everybody is worse off. Furthermore, vote trading may not produce a stable equilibrium that is Pareto-optimal either for individual members or for coalitions of members.

scholarly journals The End of Alchemy by Mervyn King: A Review Essay

2018 ◽  
Vol 56 (3) ◽  
pp. 1102-1118 ◽  
Author(s):  
Roger E. A. Farmer
Keyword(s):  
Financial Markets ◽  
Review Essay ◽  
Regulatory Reform ◽  
Alternative Solution ◽  
Pareto Optimal ◽  
Optimal Allocations ◽  
Pareto Optimal Allocations

I review The End of Alchemy by Mervyn King, published by W. W. Norton and Company in 2016. I discuss King’s proposed regulatory reform, the “pawnbroker for all seasons” (PFAS), and I compare it to an alternative solution developed in my own work. I argue that unregulated trade in the financial markets will not, in general, lead to Pareto-optimal allocations. As a consequence, solutions like the PFAS that correct problems with existing institutions are likely to be circumvented by the development of new ones. (JEL D81, D82, E44, G01, G18, G28, L51)

scholarly journals Bargaining over Risky Assets

2002 ◽  
Vol 2 (1) ◽  
Author(s):  
Muhamet Yildiz
Keyword(s):  
Pareto Optimal ◽  
Unique Equilibrium ◽  
Equilibrium Outcome ◽  
Risky Assets ◽  
Rational Allocation ◽  
Optimal Allocations ◽  
Bargaining Procedure ◽  
Subgame Perfect Equilibria ◽  
Perfect Equilibria ◽  
Pareto Optimal Allocations

We analyze the subgame-perfect equilibria of a game where two agents bargain in order to share the risk in their assets that will pay dividends once at some fixed date. The uncertainty about the size of the dividends is resolved gradually by the payment date and each agent has his own view about how the uncertainty will be resolved. As agents become less uncertain about the dividends, some contracts become unacceptable to some party to such an extent that at the payment date no trade is possible. The set of contracts is assumed to be rich enough to generate all the Pareto-optimal allocations. We show that there exists a unique equilibrium allocation, and it is Pareto-optimal. Immediate agreement is always an equilibrium outcome; under certain conditions, we further show that in equilibrium there cannot be a delay. In this model, the equilibrium shares depend on how the uncertainty is resolved, and an agent can lose when his opponent becomes more risk-averse. Finally, we characterize the conditions under which every Pareto-optimal and individually rational allocation is obtainable via some bargaining procedure as the unique equilibrium outcome.

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