## September 29, 2006

### Edgeworth Boxes and Pareto Optimality

Last night I was trying to talk about exchange curves, Edgeworth Boxes, and Pareto optimality, to explore the idea that contending political actors can be looked at in an exchange model, and ideal exchanges (Pareto optimal) could be figured out.

There are a couple of Powerpoints available on the web that explain the Edgeworth Box model for exchange and Pareto optimality:

http://www.agecon.ksu.edu/abiere/For%20Web%20505/LEC%2025%20Exchange%20and%20the%20Edgeworth%20Box%20Nov%2019%202002.ppt

http://www.econ.ucsb.edu/~tedb/Courses/Ec100BS06/PPSlides/Ch29.ppt

http://pf.nccu.edu.tw/faculty/johnwu/PFChap003.pdf#search=%22edgeworth%20box%20pareto%20optimality%22

Of course the question is what exactly are contending political actors exchanging in a negotiation or similar situation?

What I think is interesting is that maybe something like the Edgeworth Box calculator at http://faculty.oxy.edu/whitney/java/ec250/eb/eb.html can be used as a model for exploring Pareto optimal (or common good?) compromises between two actors. What if the â€śconsumersâ€? are two contending political actors in an arena, and â€śgoodsâ€? are some kind of a measure of capital, or actualization of capital? Whatâ€™s interesting is we can look at â€śtastesâ€? as desired capital which is possessed by the other political actor, or desired allocations or activation of capital. The model could help us determine optimal allocations of capital between two contenders.

Now the big up-front work is defining capital in measurable terms, so that we can treat it something like a commodity. Maybe a good lead can be found in this very interesting article, which includes a good discussion of the definitions of social capital â€“ which is what I think weâ€™re talking about here â€“ and Bourdieu:

Sobel, J. (2002). Can we trust social capital? Journal of Economic Literature, 40 (1), 139-154.

http://www.jstor.org/cgi-bin/jstor/printpage/00220515/di021482/02p0351v/0.pdf?backcontext=page&dowhat=Acrobat&config=jstor&userID=8654d75b@umn.edu/01cc99333c00501f02393&0.pdf

Tom Delaney