Kaldor-Hicks Efficiency is an economic concept used to evaluate the efficiency of resource allocation. It suggests that a policy or action is efficient if those who benefit from it could theoretically compensate those who are harmed, resulting in a net gain in overall welfare. This means that even if some individuals lose out, the total benefits must outweigh the total costs. This concept is often applied in cost-benefit analysis to justify projects or policies. Unlike Pareto Efficiency, which requires that no one is worse off, Kaldor-Hicks allows for some individuals to be disadvantaged as long as the overall benefits exceed the losses.