Outrageously Funny Word Definitions :: Arrow Research

👉 Arrow research, initiated by economist James Arrow and his colleagues in the late 1970s, focuses on addressing market failures and designing more efficient economic policies. The core of Arrow's work is the

Arrow-Debreu-Mirrlees

theorem, which demonstrates that no single social welfare function can perfectly aggregate individual preferences in a way that satisfies a set of rationality axioms (such as non-dictatorship, Pareto efficiency, and independence of irrelevant alternatives). This realization led to the development of

compensatory mechanisms

—tools like the

Kaldor-Hicks criterion

and

welfare weights

—to evaluate policy outcomes by considering how changes in welfare affect different individuals. Arrow's research also influenced the design of institutional frameworks, such as voting systems and tax policies, aiming to mitigate market failures and enhance social welfare through more equitable and rational decision-making processes.

arrow research