compensation principle

The compensation principle is a concept from economics and decision theory that suggests if a change in a situation makes someone worse off, they should be compensated in some way to restore their original level of satisfaction or well-being. Conversely, if a change benefits someone, they should be willing to accept any associated costs or sacrifices. Essentially, it focuses on ensuring that any gains or losses from a change are balanced out, maintaining fairness or efficiency by making sure that no one is worse off without at least potential compensation.