Pareto optimality refers to a situation in which resources are allocated in the most efficient manner, meaning that it is impossible to make one individual better off without making another worse off. This concept is essential in understanding how different types of games can lead to outcomes where players achieve maximum mutual benefit. It plays a crucial role in both cooperative and non-cooperative settings, helping to analyze how negotiations and decisions impact the overall efficiency of resource allocation.
congrats on reading the definition of Pareto Optimality. now let's actually learn it.