An Evolutionary Efficiency Alternative To The Notion Of Pareto Efficiency

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The paper argues that the notion of Pareto efficiency builds on two normative assumptions: the more general consequentialist norm of any efficiency criterion, and the strong no-harm principle of the prohibition of any redistribution during the economic process that hurts at least one person. These normative concerns lead to a constrained and static notion of efficiency in mainstream economics, ignoring dynamic efficiency gains from more equal allocations of resources. The paper argues that a weak no-harm principle instead provides an endogenous efficiency criterion which shifts attention away from equilibrium analysis in hypothetically perfect markets towards an evolutionary analysis of efficiency in real-world, non-equilibrium markets. Moreover, such an evolutionary notion of efficiency would be less normative than the Paretian concept.

Posted for comments on 13 Jan 2012, 9:42 am.

Comments (1)

  • Thomas Bowen says:

    Thanks for submitting this article. I really enjoyed reading it. I think you make a number of fascinating points regarding Pareto efficiency criterion. The paper was very well constructed and included a number of fascinating points regarding the normative/positive dichotomy and moral philosophy in economics. However, I felt that the ending could have used a slight expansion on the evolutionary analysis that you talked about. It left me wanting more.

    Still, it was a truly fascinating article. Thank you again.