Showing papers by "Kenneth J. Arrow published in 1996"
TL;DR: The relation between economic growth and environmental quality, and the link between economic activity and the carrying capacity and resilience of the environment are discussed.
Abstract: Nat iona l and international economic policy has usually ignored the environment. In areas where the environment is beginning to impinge on policy, as in the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA), it remains a tangential concern, and the presumption is often made that economic growth and economic liberalization (including the liberalization of intemational trade) are, in some sense, good for the environment. This notion has meant that economy-wide policy reforms designed to promote growth and liberalization have been encouraged with little regard to their environmental consequences, presumably on the assumption that these consequences would either take care of themselves or could be dealt with separately. In this article we discuss the relation between economic growth and environmental quality, and the link between economic activity and the carrying capacity and resilience of the environment (1).
496 citations
TL;DR: In this paper, the authors argue that benefit-cost analysis can play an important role in legislative and regulatory policy debates on protecting and improving health, safety, and the natural environment.
Abstract: Benefit-cost analysis can play an important role in legislative and regulatory policy debates on protecting and improving health, safety, and the natural environment. Although formal benefit-cost analysis should not be viewed as either necessary or sufficient for designing sensible public policy, it can provide an exceptionally useful framework for consistently organizing disparate information, and in this way, it can greatly improve the process and, hence, the outcome of policy analysis. If properly done, benefit-cost analysis can be of great help to agencies participating in the development of environmental, health, and safety regulations, and it can likewise be useful in evaluating agency decision-making and in shaping statutes.
445 citations
TL;DR: In this paper, the authors discuss the relation between economic growth and environmental quality, and the link between economic activity and the carrying capacity and resilience of the environment (e.g., water quality).
Abstract: Nat iona l and international economic policy has usually ignored the environment. In areas where the environment is beginning to impinge on policy, as in the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA), it remains a tangential concern, and the presumption is often made that economic growth and economic liberalization (including the liberalization of intemational trade) are, in some sense, good for the environment. This notion has meant that economy-wide policy reforms designed to promote growth and liberalization have been encouraged with little regard to their environmental consequences, presumably on the assumption that these consequences would either take care of themselves or could be dealt with separately. In this article we discuss the relation between economic growth and environmental quality, and the link between economic activity and the carrying capacity and resilience of the environment (1).
189 citations
Posted Content•
TL;DR: Arrow as mentioned in this paper takes the problem of discounting for projects with payoffs inthe far future (climate change, nuclear waste disposal) to a non-cooperative game, in which each generation issomewhat selfish (compared with perfect morality) and recognizesthat future generations will be similarly selfish.
Abstract: 24 December 1996EMF-RFF Conferenceon DiscountingDISCOUNTING, MORALITY, AND GAMING Kenneth J. Arrow1. IntroductionI take the problem of discounting for projects with payoffs inthe far future (climate change, nuclear waste disposal) to belargely ethical (Schelling 1995). There is an apparent conflict inour moral intuitions, already apparent in Ramsey's work (1928).On the one hand, moral considerations are based onuniversalizability, in which case we should treat future generationsas we would ourselves, so that the pure rate of pure timepreference should be zero. But with zero time preference and along horizon, the savings rates become inordinately high, possiblyapproaching one as the horizon goes to infinity (Koopmans 1960).A reconciliation must be based on the notion that individuals arenot morally required to subscribe fully to morality at any cost tothemselves. There are both empirical evidence and theoreticalarguments that individuals recognize moral arguments for the farfuture but treat themselves and the near future better (Cropper,Aydede, and Portney 1994; Chichilnisky 1996). This approachleads to a non-cooperative game, in which each generation issomewhat selfish (compared with perfect morality) and recognizesthat future generations will be similarly selfish. I thus come back
152 citations
TL;DR: In this paper, an ideal competitive market fcr risk-shifting is described; the payments received by individuals depend on the resolution of all the uncertainties at the time of the market, including, for example, damages to all parties, not just to the insured.
Abstract: Under certain conditions, risk-sharing and, in particular, insurance are mutually advantageous transactions. An ideal competitive market fcr risk-shifting is described; the payments received by individuals depend on the resolution of all the uncertainties at the time of the market, including, for example, damages to all parties, not just to the insured. In an ideal system, premiums depend only on the total damage in a given state, not on its distribution over individuals. In particular, mitigation measures are optimally induced. The differences between the ideal model of insurance and the real world are described, and some explanations offered.
111 citations
TL;DR: In this paper, the authors lay out the essential economic characteristics of information as an economic commodity and discuss the reasons why usual market analysis fails and some of the problems that information creates for industrial structure.
Abstract: The study of information as a choice variable has been given much more weight by disciplines other than economics. This paper tries to lay out the essential economic characteristics of information as an economic commodity. It discusses the reasons why usual market analysis fails and some of the problems that information creates for industrial structure. It is the treatment of information as a variable and its implications for economic behavior that needs further analysis. This is done by giving a formal statement of the role of information in economic decisions based on the use of information and applying it to specific forms of payoff and cost functions. That in many cases information is about rates leads to the conclusion that the value of new technical information is related to the scale of operation. Once information has been obtained its transmission is easy. Therefore it is difficult to make information into property and the incentives to create it will be lacking. In general the analysis shows that the special properties of information as an economic good have strong implications for the very role and meaning of the firm.
101 citations
53 citations
Book•
01 Jan 1996
TL;DR: In this article, the strengths and limitations of benefit cost analysis in regulatory reform are highlighted, as well as the challenges involved in the development, design, and implementation of regulatory reform.
Abstract: This primer highlights both the strengths and the limitations of benefit-cost analysis in the development, design, and implementation of regulatory reform.
49 citations
Book•
01 Jan 1996
TL;DR: The International Economic Association as discussed by the authors discusses the role of rationality in decision-making systems and its application to game theory, and presents a discussion of alternative treatment of rationality in decision making systems.
Abstract: The International Economic Association - Acknowledgements - List of Contributors - Abbreviations - Preface K.J.Arrow - Introduction E.Colombatto & M.Perlman - PART 1: RATIONAL CHOICE AND LOGICAL PROBLEMS - Decision Kinematics R.C.Jeffrey - Comment C.Schmidt - Consequentialism, Structural Rationality and Game Theory P.J.Hammond - Comment B.Munier - Paradoxes of Rationality in Decision-making Theory C.Schmidt - Comment F.Donzelli - Rejoinder C.Schmidt - Rationality and Comprehension A.Margalit & M.Yaari - Comment A.Sen - Rejoinder R.J.Aumann - PART 2: RATIONALITY IN GAME THEORY - Rationalizing Backward Induction K.Binmore & L.Samuelson - Comment B.Walliser - Rejoinder R.J.Aumann - The Decision-Theoretic Foundations of Game Theory M.Mariotti - Comment P.Battigalli - Nash Equilibrium and Evolution by Imitation J.Bjornerstedt & J.Weibull - Comment P.L.Sacco - PART 3: RATIONAL BEHAVIOUR FROM AN EXPERIMENTAL APPROACH - Rational Theory and Constructive Choice A.Tversky - Comment A.E.Roth - New Challenges to the Rationality Assumption D.Kahneman - Comment C.R.Plott - Rational Individual Behaviour in Markets and Social Choice Processes C.R.Plott - Comment D.Kahneman -Adaptive Behaviour and Strategic Rationality: Evidence from the Laboratory and the Field A.E.Roth - Comment J-L.Rulliere - PART 4: ALTERNATIVE TREATMENTS OF RATIONALITY IN DECISION-MAKING SYSTEMS - The Rationality of Adaptive Agents J.H.Holland - Comment F.Hahn - Routines, Hierarchies of Problems, Procedural Behaviour: Some Evidence from Experiments M.Egidi - Comment H.Sabourian - Rational Preferences and Rational Beliefs M.Kurz - Comment K.J.Arrow - Postface C.Schmidt - Index of Names - Subject Index