Social and Behavioral Sciences Commons^™

Abandoning Standard Assumptions In Pareto Optimization Models: Simulating Market Scenarios With Incorrectly Estimated Preference Structures, Joshua Bernard

Honors Program Theses and Projects

This honors thesis examines the consequences of abandoning specific underlying assumptions of economic models used to describe the distribution of goods among individual agents or parties and the information about each one’s preferences. In microeconomic theory, the Edgeworth Box, Pareto-optimal trade, and convex (especially Cobb-Douglas) preference structures are used to model the process in which consumers and producers make trade-off choices that allocate limited resources among competing agents. This thesis investigates the common underlying assumptions of these economic models by drawing upon mathematical theory to develop both an analytical framework and the tools that help us establish boundaries for these …