Tuesday, March 18, 2008

Can you identify this famous economist?

Trained as an engineer, this Italian economist made contributions to general equilibrium theory and developed a well-known efficiency criterion. Can you identify the famous economist pictured here and briefly describe his version of an efficient allocation of resources?

Congratulations to Yang Di, our first two-time winner this semester. Di was the first to correctly identify Vilfredo Pareto. According to the Pareto Criterion, an allocation of resources is not optimal if there exists a reallocation that makes at least one person better off without making any other person worse off. Can you imagine if Congress was forced to make policy changes on this basis? Essentially, it would require a unanimous vote to pass any legislation.

3 comments:

yangdi said...

This Italian economist is Vilfredo Pareto. He argued that a market is inefficient if a reallocation of resource could make someone better off without anybody being worse off. In other words, an efficient allocation of resources should be like that, there is no incentive for any resource to move, so that the market is in its most efficient status.

Andrew Bolton said...

The economist is Vilfredo Pareto. His efficiency model, known as Pareto efficiency, discusses how movements of certain things, such as income, in an economy can make some better off while making no one else worse off. The economy is considered inefficient until no more Pareto improvements can be made.

Lang said...

Enrico Barone
He was the first to state conditions for which a competitive market could be Pareto efficient(Given a set of alternative allocations of, say, goods or income for a set of individuals, a movement from one allocation to another that can make at least one individual better off without making any other individual worse off is called a Pareto improvement. An allocation is Pareto efficient or Pareto optimal when no further Pareto improvements can be made. )