Kenneth arrow and gerard debreu daughter

One-third of the voters rank them B, C, P. One-third rank them C, P, B. The final third rank them P, B, C. Then a majority will prefer Bush to Clinton, and a majority will prefer Clinton to Perot. It would seem, therefore, that a majority would prefer Bush to Perot. But in fact a majority prefers Perot to Bush. Arrow went on to show, in a article, that a competitive economy in equilibrium is efficient and that any efficient allocation can be reached by having the government use lump-sum taxes to redistribute and then letting the market work.

One clear-cut implication of this finding is that the government should not control prices to redistribute income, but instead, if it redistributes at all, should do so directly. Arrow also showed, with coauthor Gerard Debreu , that under certain conditions an economy reaches a general equilibrium—that is, an equilibrium in which all markets are in equilibrium.

Using new mathematical techniques, Arrow and Debreu showed that one of the conditions for general equilibrium is that there must be futures markets for all goods.

Gérard Debreu was a

Of course, we know that this condition does not hold—one cannot buy a contract for future delivery of many labor services, for example. Arrow was also one of the first economists to note the existence of a learning curve. His basic idea was that as producers increase output of a product, they gain experience and become more efficient.

Arrow has also done excellent work on the economics of uncertainty. His work in that area is still a standard source for economists. Arrow has spent most of his professional life on the economics faculties of Stanford University — and —present and Harvard University —