A problem is that sellers lie, they may be mistaken, one or both sides overlook side consequences for usage in a given context, or some unknown unknown affects the actual outcome.
Discussions of the value of patent rights have taken Arrow's information paradox into account in their evaluations.
Condorcet’s paradox is as follows: There are three candidates for office; let us call them Bush (B), Clinton (C), and Perot (P). Arrow’s insight is part of the reason economists are almost unanimously against 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.
Another desideratum is that voting procedures should always produce coherent decisions.
But as the Marquis de Condorcet showed in 1785, incoherence can occur in a majority voting system where choices are sequentially considered pairwise: specifically, that it is possible that candidate A defeats B, B defeats C, but C defeats A, thereby failing to produce a coherent notion of a winner.Arrow’s most famous scholarly achievement is his celebrated ‘impossibility theorem’, which lies at the heart of understanding how a government, or other collective decision-making process, can employ individual preferences as inputs from which decisions are determined.Dictatorships can do this with ease: a leader’s preferences determine action. Intuitively, democracies aspire to assign equal weight to voters and produce policies that are the ‘will of the people’.is a problem that companies face when managing intellectual property across their boundaries.This happens when they seek external technologies for their business or external markets for their own technologies.This column outlines the ideas of one of the transcendent minds in the history of economics.The author, holder of a chair named in Arrow’s honour, notes that while his contributions were central in creating much of what constitutes modern quantitative social science, he was always profoundly aware of the limitations of the edifice, constantly seeking to challenge and broaden economic theory.Should voting be first past the post, or should proportional representation be followed? We have powerful intuitions as to how collective choice procedures should function.One is that if everyone prefers one policy to another, the latter should never be preferred.Condorcet’s remarkable insight leads to the question of whether alternative voting schemes can avoid such outcomes.Arrow’s even more remarkable (1951a) analysis, which was his doctoral dissertation, asked whether there can be any procedure that respects the preferences of all and at the same time always produces coherent decisions?