It is not rare that multiple criteria are applied to make individual or social decisions. In the context of resource allocation problems, most prominent criteria are efficiency and equity of allocations. Pareto efficiency is probably the most widely accepted criterion among economists, but it is silent about the distributional equity of allocations. On the other hand, several concepts of equity have been proposed and extensively studied in welfare economics. Two of them are central: no-envy (Foley, 1967 and Kolm, 1972) and egalitarian-equivalence (Pazner and Schmeidler, 1978). We say that an allocation is envy-free if no agent prefers the consumption bundle of any other agent to his own and that an allocation is egalitarian-equivalent if there is a consumption bundle, called the reference bundle, such that every agent is indifferent between the bundle and his own.
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Tadenuma, K. (2008). Choice-Consistent Resolutions of the Efficiency-Equity Trade-Off. In: Pattanaik, P.K., Tadenuma, K., Xu, Y., Yoshihara, N. (eds) Rational Choice and Social Welfare. Studies in Choice and Welfare. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-79832-3_7
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