Editing Pareto efficiency (section)

{{Short description|Weakly optimal allocation of resources}}
{{Use mdy dates|date=January 2016}}

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In [[welfare economics]], a '''Pareto improvement''' formalizes the idea of an outcome being "better in every possible way". A change is called a Pareto improvement if it leaves at least one person in society better off without leaving anyone else worse off than they were before. A situation is called '''Pareto efficient''' or '''Pareto optimal''' if all possible Pareto improvements have already been made; in other words, there are no longer any ways left to make one person better off, without making some other person worse-off.<ref>{{Cite web |title=Martin J. Osborne |url=https://economics.utoronto.ca/osborne/ |access-date=2022-12-10 |website=economics.utoronto.ca}}</ref>

In [[social choice theory]], the same concept is sometimes called the '''unanimity principle''', which says that if ''everyone'' in a society ([[strict inequality|non-strictly]]) prefers A to B, society as a whole also non-strictly prefers A to B. The [[Pareto frontier|Pareto front]] consists of all Pareto-efficient situations.<ref>{{Cite web|url=http://www.cenaero.be/Page.asp?docid=27103&|title=Pareto Front|last=proximedia|website=www.cenaero.be|access-date=2018-10-08|archive-date=February 26, 2020|archive-url=https://web.archive.org/web/20200226003108/http://www.cenaero.be/Page.asp?docid=27103&|url-status=dead}}</ref>

In addition to the context of efficiency in ''allocation'', the concept of Pareto efficiency also arises in the context of [[productive efficiency|''efficiency in production'']] vs. ''[[x-inefficiency]]'': a set of outputs of goods is Pareto-efficient if there is no feasible re-allocation of productive inputs such that output of one product increases while the outputs of all other goods either increase or remain the same.<ref>[[John D. Black|Black, J. D.]], Hashimzade, N., [[Gareth Myles|Myles, G.]] (eds.), ''A Dictionary of Economics'', 5th ed. (Oxford: Oxford University Press, 2017), [https://books.google.com/books?id=WyvYDQAAQBAJ&pg=PT459 p.&nbsp;459].</ref>

Besides economics, the notion of Pareto efficiency has also been applied to selecting alternatives in [[engineering]] and [[biology]]. Each option is first assessed, under multiple criteria, and then a subset of options is identified with the property that no other option can categorically outperform the specified option. It is a statement of impossibility of improving one variable without harming other variables in the subject of [[multi-objective optimization]] (also termed '''Pareto optimization''').