Kenneth Arrow Quotes

33 Sourced Quotes

The general uncertainty about the prospects of medical treatment is socially handled by rigid entry requirements. These are designed to reduce the uncertainty in the mind of the consumer as to the quality insofar as this is possible. I think this explanation, which is perhaps the naive one, is much more tenable than any idea of a monopoly seeking to increase incomes.

Kenneth Arrow
Even Ricardo's most famous accomplishment, the law of comparative advantage in foreign trade, is incomplete, though not wrong.

Kenneth Arrow
From the point of view of seeking a consensus of the moral imperative of individuals, such consensus being assumed to exist, the problem of choosing an electoral or other choice mechanism, or, more broadly, of choosing a social structure, assumes an entirely different form from that discussed in the greater part of this study.

Kenneth Arrow
The formal structure of a decision problem in any area can be put into four parts: (1) the choice of an objective function denning the relative desirability of different outcomes; (2) specification of the policy alternatives which are available to the agent, or decisionmaker, (3) specification of the model, that is, empirical relations that link the objective function, or the variables that enter into it, with the policy alternatives and possibly other variables; and (4) computational methods for choosing among the policy alternatives that one which performs best as measured by the objective function.

Kenneth Arrow
L. Walras first formulated the state of the economic system at any point of time as the solution of a system of simultaneous equations representing the demand for goods by consumers, the supply of goods by producers and the equilibrium condition that supply equal demand on every market.

Kenneth Arrow
As is by now well known, attempts to form social judgments by aggregating individual expressed preferences always lead to the possibility of paradox.

Kenneth Arrow
Uncertainty means that we do not have a complete description of the world which we fully believe to be true.

Kenneth Arrow
I was a very polite person, though. Paul Samuelson tells these stories how he used to correct his professors. I assume that's true. But I wasn't that type.

Kenneth Arrow
The purpose of organizations is to exploit the fact that many (virtually all) decisions require the participation of many individuals for their effectiveness.

Kenneth Arrow
Studying oneself is not the most comfortable of enterprises. One is caught between the desire to show oneself in the best possible light and the fear of claiming more than one's due.

Kenneth Arrow
I then follow up with four major aspects of economic research in the last 60 years, the period of my scholarly activity. One, econometric methodology and practice, is of such fundamental importance that it cannotgo unnoticed, although I played no role in it. With the other three, general equilibrium, dynamic processes, and uncertainty and information, I was more intimately involved.

Kenneth Arrow
I am old-fashioned enough to retain David Hume's view that one can never derive ought propositions from is propositions. The two issues, method and value, are distinct.

Kenneth Arrow
Not only is it possible to devise complete models of the economy on hypotheses other than rationality, but in fact virtually every practical theory of macroeconomics is partly so based. The price- and wage- rigidity elements of Keynesian theory are hard to fit into a rational framework, though some valiant efforts have been made. … But if the Keynesian model is a natural target of criticism by the upholders of universal rationality, it must be added that monetarism is no better. I know of no serious derivation of the demand for money from a rational optimization. … The use of rationality in these arguments is ritualistic, not essential.

Kenneth Arrow
We will also assume in the present study that individual values are taken as data and are not capable of being altered by the nature of the decision process itself

Kenneth Arrow
Decision theory, as it has grown up in recent years, is a formalization of the problems involved in making optimal choices. In a certain sense — a very abstract sense, to be sure — it incorporates among others operations research, theoretical economics, and wide areas of statistics, among others.

Kenneth Arrow
In eras when authority or at least specific authorities have been questioned, there is more tendency to examine the roots of and the need for authority. The owl of Minerva flies not in the dusk but in the storm.

Kenneth Arrow
The choice among these alternatives in any given case depends on the degree of difficulty consumers have in making the choice unaided, and on the consequences of errors of judgment. It its the general social consensus, clearly, that the laissez-faire solution for medicine is intolerable. The certification proposal never seems to have been discussed seriously.

Kenneth Arrow
Certainly, there is no general principle that prevents the creation of an economic theory based on other hypotheses than that of rationality.

Kenneth Arrow
It is this thinking which I think gives rise to the greatest tragedies of history, this sense of commitment to a past purpose which reinforces the original agreement precisely at a time when experience has shown that it must be reversed.

Kenneth Arrow
The Austrian a priori dogmatism (von Mises, especially; Hayek, to a lesser degree).

Kenneth Arrow
I want to stress that rationality is not a property of the individual alone, although it is usually presented that way. Rather, it gathers not only its force but also its very meaning from the social context in which it is embedded.

Kenneth Arrow
[The decisionmaking role of the firm has progressed from the neoclassical standpoint of profit maximization to sales maximization, utility maximization, and satisficing. From the Operation Research point of view]... the ideal picture is that someone, presumable the firm that hires the operations researcher, hands him, on a silver platter, an objective function. By talking to the engineers, or by looking into a few scientific laws, he determines the policy alternatives available and also the model

Kenneth Arrow
In this aspect, the case for democracy rests on the argument that free discussion and expression of opinion are the most suitable techniques of arriving at the moral imperative implicitly common to all. Voting, from this point of view, is not a device whereby each individual expresses his personal interests, but rather where each individual gives his opinion of the general will.

Kenneth Arrow
While economic theory in general may be defined as the theory of how an economic condition or an economic development is determined within an institutional framework, the welfare theory deals with how to judge whether one condition can be said to be better in some way than another and whether it is possible, by altering the institutional framework, to achieve a better condition than the present one.

Kenneth Arrow
Multiple discoveries are in fact very common in science and for much the same reason. Developments in related fields with different motivation help one to understand a difficult problem better. Since these developments are public knowledge, many scholars can take advantage of them. It is pleasant to the ego to be first or among the first with a new discovery. However, in this case at least, the evidence is clear that the development of general equilibrium theory would have gone on quite as it did without me.

Kenneth Arrow
Perhaps as important is the relation between the existence of solutions to a competitive equilibrium and the problems of normative or welfare economics.

Kenneth Arrow
Collective action is a means of power, a means by which individuals can more fully realize their individual values.

Kenneth Arrow
I want, however, to conclude by calling attention to a less visible form of social action: norms of social behavior, including ethical and moral codes. I suggest as one possible interpretation that they are reactions of society to compensate for market failures. It is useful for individuals to have some trust in each other's word. In the absence of trust it would become very costly to arrange for alternative sanctions and guarantees, and many opportunities for mutually beneficial cooperation would have to be, foregone.

Kenneth Arrow
There are many other organizations beside the government and the firm. But all of them, whether political party or revolutionary movement, university or church, share the common characteristics of the need for collective action and the allocation of resources through nonmarket methods.

Kenneth Arrow
Krugman's whole attack is directed at a statement made neither by Arthur nor by Cassidy. Krugman has not read Cassidy's piece with any care nor has he bothered to review what Arthur has in fact said.

Kenneth Arrow