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Thus the contract curve, the set of points Octavio and Abby could end up at, is the section of the Pareto efficient locus that is in the interior of the lens formed by the initial allocations. The analysis cannot say which particular point along the contract curve they will end up at — this depends on the two people's bargaining skills.
The entire Pareto set is sometimes called the contract curve, while Mas-Colell et al. restrict the definition of the contract curve to only those points on the Pareto set which make both Abby and Octavio at least as well off as they are at their initial endowment.
However, based on the extent of society’s preferences for an equal distribution of real income, a point off the curve may be preferred. All points on or below the utility–possibility frontier are attainable by society; all points above it are not attainable. The utility–possibility frontier is derived from the contract curve. [1]
The idea of the core already appeared in the writings of Edgeworth (1881), at the time referred to as the contract curve. [1] Even though von Neumann and Morgenstern considered it an interesting concept, they only worked with zero-sum games where the core is always empty. The modern definition of the core is due to Gillies. [2]
This process of B's competing against one another to offer the A's a better price will continue until the A's are indifferent between trading at P and trading on the contract curve (Figure 3). The same reasoning can be applied to the case where A(1) initially receives all the gains from trade, and it can be shown that the outermost limit given ...
The bank says the increase in the numbers of people identified as being affected by the dam came because the project’s managers used a broader definition of affected households. In other cases, bank officials have attributed shifting numbers for people harmed by projects to later expansions in projects’ size or to population growth during ...
U.S. Supreme Court Justice Neil Gorsuch will not participate in an environmental case to be argued next week involving a proposed railway in Utah, the court said on Wednesday, a move that followed ...
Space-filling curve (Peano curve) See also List of fractals by Hausdorff dimension. ... Contract curve; Cost curve; Demand curve. Aggregate demand curve;