Open Yale CoursesECON 251: Financial TheoryLecture 4 - Efficiency, Assets, and Time<< previous session | next session >>Overview:Over time, economists' justifications for why free markets are a good thing have changed. In the first fewclasses, we saw how under some conditions, the competitive allocation maximizes the sum of agents' utilities.When it was found that this property didn't hold generally, the idea of Pareto efficiency was developed. Thisclass reviews two proofs that equilibrium is Pareto efficient, looking at the arguments of economistsEdgeworth and Arrow-Debreu. The lecture suggests that if a broadening of the economic model invalidatedthe sum of utilities justification of free markets, a further broadening might invalidate the Pareto efficiency
This is the end of the preview.
access the rest of the document.