Fabián Flores-Bazán, Sigifredo Laengle, Gino Loyola:
Characterizing the efficient points without closedness or free-disposability
Many multicriteria problems in economics and finance require that efficient solutions be found. A recent contribution to production theory established a characterization of efficient points under closedness and free-disposability (Bonnisseau and Crettez, 2007, Theorem 1). However, as will be shown using a number of examples, these results cannot be applied to simple and plausible production sets, nor can they be extended to other classic multicriteria problems such as those arising in optimal portfolio theory and bargaining theory. To address these limitations, a reformulation of the above theorem without closedness or free-disposability is proposed. This enables efficient solutions for a wider range of multicriteria problems to be identified.
This preprint gave rise to the following definitive publication(s):
Fabián FLORES-BAZáN, Sigifredo LAENGLE, Gino LOYOLA: Characterizing the efficient points without closedness or free-disposability. Central European Journal of Operations Research, vol. 21, 2, pp. 401-410, (2013).