Showing papers by "Kenneth J. Arrow published in 1984"
Book•
01 Oct 1984
TL;DR: In this article, the authors discuss the two types of hidden action and hidden information in the principal-agent relationship and evaluate the effect of these two types on the welfare of both the principal and the agent.
Abstract: : The agency relationship is a pervasive fact of economic life. Even in the limited sense in which the concept has traditionally been understood in ordinary and in legal discourse, the principal-agent relation is a phenomenon of significant scope and economic magnitude. But economic theory has recently recognized that analogous interactions are virtually universal in the economy, at least as one significant component of almost all transactions. The common element is the presence of two individuals. One (the agent) must choose an action from a number of alternative possibilities. The action affects the welfare of both the agent and another person, the principal. In this study of organizational efficiency this report discusses the following topics: (1) The Two Types--Hidden Action and Hidden Information;(2) Example--Public Utility Rate Setting; (3) Multiple Principles; (4) The Hidden-Action Model; (5) Monitoring; (6) Multiple Agents and Repeated Relations; (7) An Evaluation of Agency Theory.
1,040 citations
79 citations
Book•
01 Jan 1984
TL;DR: A difficulty in the concept of social welfare is discussed in this article, where Tullock and an Existence Theorem are used to define the principle of rationality in collective decision-making.
Abstract: 1 A Difficulty in the Concept of Social Welfare 2 Little's Critique of Welfare Economics 3 The Principle of Rationality in Collective Decisions 4 Values and Collective Decision Making 5 The Place of Moral Obligation in Preference Systems 6 Tullock and an Existence Theorem 7 A Utilitarian Approach to the Concept of Equality in Public Expenditures 8 Some Ordinalist-Utilitarian Notes on Rawis's Theory of Justice 9 Formal Theories of Social Welfare 10 Rawls's Principle of Just Saving 11 Extended Sympathy and the Possibility of Social Choice 12 Current Developments in the Theory of Social Choice 13 Nozick's Entitlement Theory of Justice 14 The Trade-off between Growth and Equity 15 Optimal and Voluntary Income Distribution Index
76 citations
Book•
27 Sep 1984
TL;DR: In this paper, alternative approaches to the theory of choice in risk-taking situations are presented, and the use of Unbounded Utility Functions in Expected-Utility Maximization is discussed.
Abstract: 1. Homogeneous Systems in Mathematical Economics: A Comment 2. Alternative Approaches to the Theory of Choice in Risk-Taking Situations 3. The Determination of Many-Commodity Preference Scales by Two-Commodity Comparisons 4. Utilities, Attitudes, Choices: A Review Note 5. The Measurement of Price Changes 6. Rational Choice Functions and Orderings 7. Additive Logarithmic Demand Functions and the Slutsky Relations 8. Utility and Expectation in Economic Behavior 9. The Theory of Risk Aversion 10. Exposition of the Theory of Choice under Uncertainty 11. The Use of Unbounded Utility Functions in Expected-Utility Maximization: Response 12. Optimal Insurance and Generalized Deductibles 13. Risk Perception in Psychology and Economics Index
52 citations
16 citations
5 citations
TL;DR: The authors analyzes conditions under which permanent responses can be inferred from data on temporary experiments, and shows that the response to permanent changes is different than if the experimental change in constraints confronting participants were permanent.
Abstract: Participants in labor market experiments are aware that the experiments run for a limited amount of time. Thus behavior during a temporary experiment will be different than if the experimental change in constraints confronting participants were permanent. In evaluating changes in policy, however, the response to permanent changes is of primary interest. The paper analyzes conditions under which permanent responses can be inferred from data on temporary experiments.