Lexicographic preferences

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Lexicographic preferences

RichaS
Consider an exchange economy with 2 agents and 2 Goods

Both agents preferences are Lexicographic ( x over y)
endowment of A = (2,4)
endowment of B = (4,2)

Plot utility possibility frontier and set of all pareto efficient allocation.

Will the pareto efficient allocation be the endowment itself because B won't be willing to give up any x for more y?? And what will be the UPF?
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Re: Lexicographic preferences

Amit Goyal
Administrator
All allocations are efficient including the endowment. You don't have UPFs in such cases, because preferences do not have utility representation.