| Kenneth Joseph Arrow | an American economist known for his contributions to welfare economics and to general economic equilibrium theory. He was cowinner (with Sir John R. Hicks) of the Nobel Prize for Economics in 1972. Perhaps his most
startling thesis (built on elementary mathematics) was the “impossibility theorem” (or “Arrow’s theorem”), which holds that, under certain conditions of rationality and equality, it is impossible to guarantee that a ranking of societal preferences will correspond to rankings of individual
preferences when more than two individuals and alternative choices are involved. |
| Among Arrow’s major publications are | Social Choice and Individual Values (1951), Essays
in the Theory of Risk Bearing (1971), and The Limits of Organization (1974). |
| What is Social Choice Theory? | Social choice theory is an economic theory that considers whether a society can be ordered in a way that reflects individual preferences. The theory was developed by economist Kenneth Arrow and published in his book Social Choice and Individual Values in 1951. |
| Arrow’s Impossibility Theorem | a social-choice paradox illustrating the flaws of ranked voting systems. It states that a clear order of preferences cannot be determined while adhering to mandatory principles of fair voting procedures. According to Arrow's impossibility theorem, in all cases where preferences are ranked |
| it is impossible to formulate a social ordering without
violating one of the following conditions: | Unrestricted Domain: Voting must account for all individual preferences.
Non-Dictatorship: The wishes of multiple voters should be taken into consideration.
Pareto Efficiency/Unanimity: Unanimous individual preferences must be respected: If
every voter prefers candidate A over candidate B, candidate A should win.
Independence of Irrelevant Alternatives: If a choice is removed, then the others' order
should not change: If candidate A ranks ahead of candidate B, candidate A should still be
ahead of candidate B, even if a third candidate, candidate C, is removed from
participation |
| Arrow's impossibility theorem, part of social choice theory | an economic theory that considers whether a society can be ordered in a way that reflects individual preferences, was lauded as a major breakthrough. It went on to be widely used for analyzing problems in welfare economics. |
| The theorem proves that no voting system can be designed that satisfies these three "fairness"
criteria: | If every voter prefers alternative X over alternative Y, then the group prefers X over Y
If every voter's preference between X and Y remains unchanged, then the group's
preference between X and Y will also remain unchanged
There is no "dictator": no single voter possesses the power to always determine the
group's preference |
