Lesson plan
Bayesian efficiency
Bayesian efficiency is an analog of Pareto efficiency for situations in which there is incomplete information. Under Pareto efficiency, an allocation of a resource is Pareto efficient if there is no other allocation of that resource that makes no one worse off while making some agents strictly better off. A limitation with the concept of Pareto efficiency is that it assumes that knowledge about other market participants is available to all participants, in that every player knows the payoffs and strategies available to other players so as to have complete information. Often, the players have types that are hidden from the other player.
Article summary
Bayesian efficiency is an analog of Pareto efficiency for situations in which there is incomplete information. Under Pareto efficiency, an allocation of a resource is Pareto efficient if there is no other allocation of that resource that makes no one worse off while making some agents strictly better off. A limitation with the concept of Pareto efficiency is that it assumes that knowledge about other market participants is available to all participants, in that every player knows the payoffs and strategies available to other players so as to have complete information. Often, the players have types that are hidden from the other player.
Key claims
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Discussion questions
- Summarise the article in your own words. Which single claim would you verify first, and why?
- Which claim in this article is most likely to be revised as the sources update? How would you check its current status?
- If two sources disagreed about one of these facts, what would you need in order to trust one over the other?
Bibliography
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Key claims and bibliography are generated from the same tracked claims and sources as the article page.