Showing papers by "Kenneth J. Arrow published in 1977"

Extended Sympathy and the Possibility of Social Choice

Abstract: Le probleme de la compatibilite entre les choix sociaux collectifs et une theorie de la justice qui tienne compte des differences individuelles. L'A. confronte, d'une maniere partiellement formelle, les principes discutes par J. Rawls, R. Nozick, etc. avec ceux qu'utilisent les theories du choix social. Il discute en particulier la notion des "comparaisons interpersonnelles ordinales", qui semblent necessaires a tout choix social, mais qui tendent par ailleurs a negliger certaines particularites purement individuelles.

Studies in Resource Allocation Processes: Appendix: An optimality criterion for decision-making under ignorance

Abstract: Introduction It is intended here to offer a possible characterization of the concept of complete ignorance. Like other formulations, the problem is taken to be that of choice of an action from a given set when the consequences of any action are functions of an unknown state of nature. However, the properties regarded as defining an optimal choice are designed to reflect completely the idea that there is no a priori information available which gives any state of nature a distinguished position. Most importantly, the optimality criterion differs from those in the now more standard subjective probability framework by not presupposing a fixed list of states of nature. As we note shortly, the arguments and conclusions are much closer to Shackle's than to those of Ramsey, de Finetti, and Savage. The axiom systems of these last authors imply the existence of subjective probabilities as weights to be assigned to the different possible states of nature. These authors thus provide a foundation for the centuries-old use of probability as a guide to action. The concept of complete ignorance can be expressed in this subjective probability framework only by the assignment of equal probabilities to all the states of nature, which is the principle of indifference or insufficient reason implicit in the earliest combinatorial probability calculations of Pascal and Fermat and explicit in Jacob Bernoulli, Bayes, and Laplace.

Stability of competitive-equilibrium

Abstract: Introduction A great deal of work has been done recently on what one may call the static aspects of competitive equilibrium, its existence, uniqueness, and optimality. This work is characterized, in the main, by being based on models whose assumptions are formulated in terms of certain properties of the individual economic units, although in the last analysis it is the nature of the aggregate excess demand functions that determines the properties of equilibria. With regard to dynamics , especially the stability of equilibrium, much remains to be done. The concept of stability, used already by the nineteenth century economists in its modern sense, did not receive systematic treatment in the context of economic dynamics until Samuelson's paper of 1941. Samuelson, however, did not fully explore the implications of the assumptions underlying the perfectly competitive model. He (as well as Lange, Metzler, and Morishima) focused attention on the relationship between “true dynamic stability” and the concept of “stability” as defined by Hicks in Value and Capital , rather than on whether under a given set of assumptions stability (in either sense) would prevail or not. Even though the Hicksian concept does not, in general, coincide with that of “true dynamic stability,” it is of considerable interest to us for two reasons: first, as shown by the writers just cited, there are situations where the two concepts are equivalent; second, because the equilibrium whose “stability” Hicks studied is indeed competitive equilibrium.

The Genesis of Dynamic Systems Governed by Metzler Matrices

Abstract: The literature on dynamic systems in economics is vast, and an important part of that deals with systems of differential or of difference equations where the Jacobian of the right-hand side is a Metzler matrix, i. e., a matrix whose off-diagonal elements are non-negative. Such matrices have a wide range of applicability in dynamic economic models, in input-output analysis, in stability analysis of systems of excess demands governing price changes, and in multi-sector and multi-national Keynesian income determination models. Oskar Morgenstern early perceived the importance of such models and encouraged research in them, as seen in the papers by Y.K. Wong and M.A. Woodbury in Morqenstern (3). For a later survey, see (2).