Changes

In [[game theory]] and [[economics]], the concept of '''Pareto efficiency''' (or '''Pareto optimality''') is a method to judge the [[efficiency]] of a set of decisions made by the participants. It was named after [[Vilfredo Pareto]].

In [[game theory]] and [[economics]], the concept of '''Pareto efficiency''' (or '''Pareto optimality''') is a method to judge the [[efficiency]] of a set of decisions made by the participants. It was named after [[Vilfredo Pareto]].

A set of decisions "x/y" (meaning that participant A chooses "x" while participant B chooses "y") is called Pareto optimal if there is '''no''' other state, other participants' prior and concurrent actions remaining the same, in which at least one participant can improve his own outcome.

A set of decisions "x/y" (meaning that participant A chooses "x" while participant B chooses "y") is called Pareto optimal if there is '''no''' other state, other participants' concurrent actions and everybody's prior actions remaining the same, in which at least one participant can improve his own outcome.

If a participant can improve his outcome without harming anybody else, the new decision set '''Pareto dominates''' the old one.

If a participant can improve his outcome, other participants' concurrent actions and everybody's prior actions remaining the same, the new decision set '''Pareto dominates''' the old set.  When there are no more decision sets that ''Pareto dominate'' the current set, the current set is said to be ''Pareto optimal''.

==An example - Prisoner's dilemna==

==An example - Prisoner's dilemna==