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Belief-consistent Pareto dominance

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  • Xiangyu Qu

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, WHUT - Wuhan University of Technology)

Abstract

The classic Pareto criterion claims that all voluntary trades, even on the grounds of heterogeneous beliefs, should be encouraged. I argue that a trade without hope for Pareto improvement remains controversial. I introduce and characterize a notion of belief-consistent Pareto dominance to formalize this argument, which, in addition to unanimity of preferences, requires all rankings in a trade to be supported by some common beliefs that must coincide with the agents' beliefs about the events on which all agents agree.

Suggested Citation

  • Xiangyu Qu, 2020. "Belief-consistent Pareto dominance," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02973212, HAL.
    • Handle: RePEc:hal:cesptp:hal-02973212
    DOI: 10.1007/s40505-019-00178-0
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    References listed on IDEAS

    as
    1. Philippe Mongin & Marcus Pivato, 2020. "Social preference under twofold uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(3), pages 633-663, October.
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    More about this item

    Keywords

    Heterogeneous beliefs; Belief consistent; Pareto condition; Speculation;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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