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30 sats \ 3 replies \ @Undisciplined 12 Jun \ parent \ on: Vilfredo Pareto: A Return to the Libertarian Roots of Elite Theory econ
The 80/20 rule is just one particular implication of the Pareto distribution, which has very wide applications in probability and statistics.
The concept of Pareto Efficiency has become foundational to microeconomic theory and it's a very libertarian friendly notion. An outcome is considered Pareto Efficient if there's no way to make one person better without harming another: i.e. there are no remaining mutually beneficial transactions.
An outcome is considered Pareto Efficient if there's no way to make one person better without harming another: i.e. there are no remaining mutually beneficial transactions.
It is hard to see all mutually beneficial transactions being accomplished, for the simple reason that the communications factor will leave some people out of the transactions. They just will not know about the possibility of the transaction. It is a good rule to work towards but in the limits and margins, I don’t think that there are many, if any, such transactions happening.
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Pareto Efficiency is applied to resource allocations, so it can abstract away from things like search and information costs.
The point is that modern micro doesn't rest on some kind of aggregation of preferences to do a group utility maximization exercise. It acknowledges that the right framework is mutually beneficial exchanges (that other crap gets smuggled back in later).
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The point is that modern micro doesn't rest on some kind of aggregation of preferences to do a group utility maximization exercise. It acknowledges that the right framework is mutually beneficial exchanges (that other crap gets smuggled back in later).
I like how you state that: the other crap! A lot of that other crap is antithetical to the basic premises of the idea Pareto and the Austrians are proposing as theory. They, the other economists, seem to be able to twist a perfectly logical and reasonable theory into a nightmare of unreality.
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