In economics, the throw away paradox is a situation in which a person can gain by throwing away some of his property.
It was first described by Robert J. Aumann and B. Peleg[1] as a note on a similar paradox by David Gale.
[2] There is an economy with two commodities (x and y) and two traders (e.g. Alice and Bob).
is a certain parameter between 0 and 1, but many other such functions exist.
The explanation for the paradox is that when the quantity of x decreases, its price increases, and the increase in price is more than sufficient to compensate Alice for the decrease in quantity.