Question

what is pareto-optimality?

Answer 1

Pareto efficiency, or Pareto optimality, is a concept in economics with applications in engineering

http://en.wikipedia.org/wiki/Pareto_efficiency

Answer 2

Pareto-optimality is a a situation in which no party can be made better off without making another party worse-off. It relates to pareto improvements. A pareto improvement is possible whenever someone can be made better off without making anyone worse off. Applies to reallocation of reasources, for example, if I value X more than Y and you value Y more than X, then I can swap some of my Y for some your X (in order to reallocate our resources) and we will both be better off (i.e. no one is worse off, we both gain) which is thus a pareto improvement (because atleast 1 person is better off and noone is worse off). Pareto optimality occurs when all pareto improvements have been exhausted, thus no party can be made better off without making the other worse off and there is no possible gains from reallocation. Might not be exactly right but that's the gist of it