MIT 14.04 Intermediate Microeconomic Theory, Fall 2020 - Lecture 7: Pareto Optimality

MIT 14.04 Intermediate Microeconomic Theory, Fall 2020 Instructor: Prof. Robert Townsend View the complete course: https://ocw.mit.edu/courses/14-04-intermediate-microeconomic-theory-fall-2020/ YouTube Playlist: https://www.youtube.com/watch?v=XSTSfCs74bg&list=PLUl4u3cNGP63wnrKge9vllow3Y2OOOKqF How do we divide the social pie of the available resources in an economy across its household members? Economists have a way of figuring out what allocations of consumption bundles are efficient, or what allocations are not. Crucially, this is different from taking a stand on the appropriate distribution of income. Confusion on this subject, equity vs. efficiency, abounds in the popular press. An application is discussed: The Pareto optimal allocation of risk implemented with risk sharing rules – who gets what when there are adverse shocks. License: Creative Commons BY-NC-SA More information at https://ocw.mit.edu/terms More courses at https://ocw.mit.edu Support OCW at http://ow.ly/a1If50zVRlQ We encourage constructive comments and discussion on OCW’s YouTube and other social media channels. Personal attacks, hate speech, trolling, and inappropriate comments are not allowed and may be removed. More details at https://ocw.mit.edu/comments.