Paretoorden

Paretoorden, also known as Pareto ordering or Pareto dominance, is a concept used in economics, game theory, and decision theory to compare multiple possible outcomes or states. An outcome is considered Pareto superior to another if at least one person is better off and no one is worse off. If an outcome is Pareto superior to another, the second outcome is said to be Pareto dominated by the first.

A set of outcomes is considered Pareto efficient, or Pareto optimal, if there is no other feasible outcome that is Pareto superior to it. This means that to improve the situation for one individual, at least one other individual must be made worse off. In simpler terms, at the Pareto frontier, all available resources are fully utilized, and any attempt to redistribute them to benefit one party will inevitably harm another.

The concept is named after the Italian economist Vilfredo Pareto. It is a normative concept, meaning it provides a way to evaluate and rank different situations, but it does not offer a method for choosing among Pareto efficient outcomes if they involve trade-offs. For example, in a negotiation, two outcomes might be Pareto efficient, but one might be preferred by one party and the other by the second. Pareto orden simply states that it's impossible to make one person better off without making another worse off in either of these efficient outcomes. This principle is fundamental in analyzing market efficiency and policy interventions.