No-Betting Pareto Dominance

Itzhak Gilboa, Larry Samuelson and David Schmeidler

No 275781, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: We argue that, in the presence of uncertainty, the notion of Pareto dominance is not as compelling as under certainty. In particular, voluntary trade that is based on differences in tastes is commonly accepted as favorable, because no agent involved in it can be wrong about her tastes. By contrast, voluntary trade that is based on incompatible beliefs may indicate that at least one agent is wrong about her beliefs. We propose a weaker, No-Betting, notion of Pareto domination, which requires, on top of unanimity of preference, the existence of shared beliefs that can rationalize such preference for each agent.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 42
Date: 2012-12
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Citations: View citations in EconPapers (7)

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Journal Article: No‐Betting‐Pareto Dominance (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275781

DOI: 10.22004/ag.econ.275781

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