2008•The New Palgrave Dictionary of EconomicsRequires access
Arrow, Kenneth Joseph (born 1921)
Ross M. Starr
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Abstract
Kenneth Arrow is the author of key post-Second World War innovations in economics that have made economic theory a mathematical science. The Arrow Possibility Theorem created the field of social choice theory. Arrow extended and proved the relationship of Pareto efficiency with economic general equilibrium to include corner solutions and non-differentiable production and utility functions. With Gerard Debreu, he created the Arrow–Debreu mathematical model of economic general competitive equilibrium including sufficient conditions for the existence of market-clearing prices. Arrow securities and contingent commodities extend the model to cover uncertainty and provide a cornerstone of the modern theory of finance.