IDEAS home Printed from https://ideas.repec.org/a/spr/etbull/v8y2020i2d10.1007_s40505-019-00178-0.html
   My bibliography  Save this article

Belief-consistent Pareto dominance

Author

Listed:
  • Xiangyu Qu

    (Centre d’Economie de la Sorbonne
    Wuhan University of Technology)

Abstract

The classic Pareto criterion claims that all voluntary trades, even on the grounds of heterogeneous beliefs, should be encouraged. I argue that a trade without hope for Pareto improvement remains controversial. I introduce and characterize a notion of belief-consistent Pareto dominance to formalize this argument, which, in addition to unanimity of preferences, requires all rankings in a trade to be supported by some common beliefs that must coincide with the agents’ beliefs about the events on which all agents agree.

Suggested Citation

  • Xiangyu Qu, 2020. "Belief-consistent Pareto dominance," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 219-229, October.
    • Handle: RePEc:spr:etbull:v:8:y:2020:i:2:d:10.1007_s40505-019-00178-0
    DOI: 10.1007/s40505-019-00178-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40505-019-00178-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40505-019-00178-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Markus K. Brunnermeier & Alp Simsek & Wei Xiong, 2014. "A Welfare Criterion For Models With Distorted Beliefs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1753-1797.
    2. Morris, Stephen, 1995. "The Common Prior Assumption in Economic Theory," Economics and Philosophy, Cambridge University Press, vol. 11(2), pages 227-253, October.
    3. Philippe Mongin & Marcus Pivato, 2020. "Social preference under twofold uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(3), pages 633-663, October.
    4. David M. Kreps, 2012. "Microeconomic Foundations I: Choice and Competitive Markets," Economics Books, Princeton University Press, edition 1, volume 1, number 9890.
    5. Itzhak Gilboa & Dov Samet & David Schmeidler, 2004. "Utilitarian Aggregation of Beliefs and Tastes," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 932-938, August.
    6. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January.
    7. Itzhak Gilboa & Larry Samuelson & David Schmeidler, 2014. "No‐Betting‐Pareto Dominance," Econometrica, Econometric Society, vol. 82(4), pages 1405-1442, July.
    8. Gabrielle Gayer & Itzhak Gilboa & Larry Samuelson & David Schmeidler, 2014. "Pareto Efficiency with Different Beliefs," The Journal of Legal Studies, University of Chicago Press, vol. 43(S2), pages 151-171.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pivato, Marcus, 2022. "Bayesian social aggregation with accumulating evidence," Journal of Economic Theory, Elsevier, vol. 200(C).
    2. Philippe Mongin & Marcus Pivato, 2020. "Social preference under twofold uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(3), pages 633-663, October.
    3. Gadi Barlevy, 2015. "Bubbles and Fools," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II.
    4. Markus K. Brunnermeier & Alp Simsek & Wei Xiong, 2014. "A Welfare Criterion For Models With Distorted Beliefs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1753-1797.
    5. Eduardo Dávila, 2023. "Optimal Financial Transaction Taxes," Journal of Finance, American Finance Association, vol. 78(1), pages 5-61, February.
    6. ÅžimÅŸek, Alp, 2021. "The Macroeconomics of Financial Speculation," CEPR Discussion Papers 15733, C.E.P.R. Discussion Papers.
    7. Crès, Hervé & Tvede, Mich, 2018. "Regulation of trades based on differences in beliefs," European Economic Review, Elsevier, vol. 101(C), pages 133-141.
    8. Takashi Hayashi & Michele Lombardi, 2019. "Fair social decision under uncertainty and belief disagreements," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 67(4), pages 775-816, June.
    9. Chen Li, 2022. "Preference Aggregation with a Robust Pareto Criterion," KIER Working Papers 1086, Kyoto University, Institute of Economic Research.
    10. Fleurbaey, Marc & Zuber, Stéphane, 2017. "Fair management of social risk," Journal of Economic Theory, Elsevier, vol. 169(C), pages 666-706.
    11. Federica Ceron & Vassili Vergopoulos, 2017. "Aggregation of Bayesian preferences: Unanimity vs Monotonicity," Post-Print halshs-01539444, HAL.
    12. McCarthy, David & Mikkola, Kalle & Thomas, Teruji, 2016. "Utilitarianism with and without expected utility," MPRA Paper 72578, University Library of Munich, Germany.
    13. Eric Danan & Thibault Gajdos & Brian Hill & Jean-Marc Tallon, 2016. "Robust Social Decisions," American Economic Review, American Economic Association, vol. 106(9), pages 2407-2425, September.
    14. Blume, Lawrence E. & Cogley, Timothy & Easley, David A. & Sargent, Thomas J. & Tsyrennikov, Viktor, 2018. "A case for incomplete markets," Journal of Economic Theory, Elsevier, vol. 178(C), pages 191-221.
    15. Sprumont, Yves, 2018. "Belief-weighted Nash aggregation of Savage preferences," Journal of Economic Theory, Elsevier, vol. 178(C), pages 222-245.
    16. Dietrich, Franz, 2021. "Fully Bayesian aggregation," Journal of Economic Theory, Elsevier, vol. 194(C).
    17. Federica Ceron & Vassili Vergopoulos, 2017. "Aggregation of Bayesian preferences: Unanimity vs Monotonicity," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01539444, HAL.
    18. Zuber, Stéphane, 2016. "Harsanyi’s theorem without the sure-thing principle: On the consistent aggregation of Monotonic Bernoullian and Archimedean preferences," Journal of Mathematical Economics, Elsevier, vol. 63(C), pages 78-83.
    19. Kim, Jeong Ho (John) & Kim, Byung-Cheol, 2021. "A welfare criterion with endogenous welfare weights for belief disagreement models," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 312-333.
    20. Brandl, Florian, 2021. "Belief-averaging and relative utilitarianism," Journal of Economic Theory, Elsevier, vol. 198(C).

    More about this item

    Keywords

    Heterogeneous beliefs; Belief consistent; Pareto condition; Speculation;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:etbull:v:8:y:2020:i:2:d:10.1007_s40505-019-00178-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.