Belief-consistent Pareto Dominance

2018-04-17

       Speaker£ºQU Xiangyu(CNRS,France)

¡¡¡¡Time£º10:00-11:30, April  23,2018

¡¡¡¡Site£ºEMS B228

¡¡¡¡Abstract: Classic Pareto criterion claims that every voluntary trades even on the ground of heterogenous 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 requires, aside from unanimity of preferences, all rankings in a trade should be supported by some common beliefs, which have to coincide with agents' beliefs over the events on which all agents agree. Its application and welfare analysis is also discussed.