List of Paradoxes - Economics

Economics

• Allais paradox: A change in a possible outcome that is shared by different alternatives affects people's choices among those alternatives, in contradiction with expected utility theory.
• Arrow information paradox: To sell information you need to give it away before the sale.
• Bertrand paradox: Two players reaching a state of Nash equilibrium both find themselves with no profits.
• Braess's paradox: Adding extra capacity to a network can reduce overall performance.
• Demographic-economic paradox: nations or subpopulations with higher GDP per capita are observed to have fewer children, even though a richer population can support more children.
• Diamond-water paradox (or paradox of value) Water is more useful than diamonds, yet is a lot cheaper.
• Downs–Thomson paradox: Increasing road capacity at the expense of investments in public transport can make overall congestion on the road worse.
• Easterlin paradox: For countries with income sufficient to meet basic needs, the reported level of happiness does not correlate with national income per person.
• Edgeworth paradox: With capacity constraints, there may not be an equilibrium.
• Ellsberg paradox: People exhibit ambiguity aversion (as distinct from risk aversion), in contradiction with expected utility theory.
• European paradox: The perceived failure of European countries to translate scientific advances into marketable innovations.
• Gibson's paradox: Why were interest rates and prices correlated?
• Giffen paradox: Increasing the price of bread makes poor people eat more of it.
• Icarus paradox: Some businesses bring about their own downfall through their own successes.
• Jevons paradox: Increases in efficiency lead to even larger increases in demand.
• Leontief paradox: Some countries export labor-intensive commodities and import capital-intensive commodities, in contradiction with Heckscher–Ohlin theory.
• Lucas paradox: Capital is not flowing from developed countries to developing countries despite the fact that developing countries have lower levels of capital per worker, and therefore higher returns to capital.
• Mandeville's paradox: Actions that may be vicious to individuals may benefit society as a whole.
• Metzler paradox: The imposition of a tariff on imports may reduce the relative internal price of that good.
• Paradox of thrift: If everyone saves more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population.
• Paradox of toil: If everyone tries to work during times of recession, lower wages will reduce prices, leading to more deflationary expectations, leading to further thrift, reducing demand and thereby reducing employment.
• Productive failure: Providing less guidance and structure and thereby causing more failure is likely to promote better learning.
• Productivity paradox (also known as Solow computer paradox): Worker productivity may go down, despite technological improvements.
• Scitovsky paradox: Using the Kaldor–Hicks criterion, an allocation A may be more efficient than allocation B, while at the same time B is more efficient than A.
• Service recovery paradox: Successfully fixing a problem with a defective product may lead to higher consumer satisfaction than in the case where no problem occurred at all.
• St. Petersburg paradox: People will only offer a modest fee for a reward of infinite expected value.
• Paradox of Plenty: The Paradox of Plenty (resource curse) refers to the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources.
• Tullock paradox