My friend here has written a nice article on economics. https://datinker.com/blog/2015/08/04/trade-off-between-equity-and-efficiency/ I would like to share some of my thoughts regarding the subject of "equity and efficiency". It occurs to me that the interpretations of "information" in the two mentioned thought experiments are not necessarily the same. Nevertheless, I agree with her conclusion that perfect...
Category: Economics
Trade-off between Equity and Efficiency
It seems that we have taken the trade-off between equity and efficiency in microeconomics for granted. Free market can achieve allocative efficiency at the expense of equity, whereas government may choose to sacrifice efficiency in exchange for equity. The trade-off between these two goals is obvious from empirical evidence; we seldom ask ourselves why this...