Pareto, Vilfredo financial definition of Pareto, Vilfredo
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Pareto, Vilfredo (1848–1923) an Italian economist who used the mathematical principles applicable to equilibrium in mechanical systems to construct a general theory of economic equilibrium in his book Mannuale d‘Economica Politica (1906). Pareto acknowledged that utility was not measurable but argued that a purely ordinal conception of utility (see ORDINAL UTILITY) was sufficient to formulate a theory of choice. This led Pareto to use INDIFFERENCE CURVES to show how an individual's scale of preferences can be represented by an indifference map. Pareto was also known for his ideas on income distribution. See PARETO OPTIMALITY.