“Arrow’s Impossibility Theorem is quite surprising. It shows that three very plausible and desirable features of a social decision mechanism are inconsistent with democracy: there is no “perfect” way to make social decisions. There is no perfect way to “aggregate” individual preferences to make one social preference. If we want to find a way to aggregate individual preferences to form social preferences, we will have to give up one of the properties of a social decision mechanism described in Arrow’s theorem.”

Hal R. Varian, Microeconomics: A Modern Approach, Chapter 33. Welfare, 2002

Adopted from Wikiquote. Last update June 3, 2021. History

Help us to complete the source, original and additional information

Do you have more details about the quote "Arrow’s Impossibility Theorem is quite surprising. It shows that three very plausible and desirable features of a socia…" by Hal Varian?

Hal Varian3

American economist 1947

Related quotes

“As is by now well known, attempts to form social judgments by aggregating individual expressed preferences always lead to the possibility of paradox.”

Kenneth Arrow (1921–2017) American economist

Source: 1970s-1980s, The Limits Of Organization (1974), Chapter 1, Rationality: Individual And Social, p. 25

“Government is essentially a big computer that elicits from citizens their preferences and uses this information to produce social decisions.”

Harvey S. Rosen (1949) American economist

Source: Public Finance - International Edition - Sixth Edition, Chapter 6, Political Economy, p. 117

“In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make ‘political’ decisions, and the market mechanism, typically used to make ‘economic’ decisions. In the emerging democracies with mixed economic systems Great Britain, France, and Scandinavia, the same two modes of making social choices prevail, though more scope is given to the method of voting and to decisions based directly or indirectly on it and less to the rule of the price mechanism. Elsewhere in the world, and even in smaller social units within the democracies, the social decisions are sometimes made by single individuals or small groups and sometimes (more and more rarely in this modern world) by a widely encompassing set of traditional rules for making the social choice in any given situation, for example, a religious code.”

Kenneth Arrow (1921–2017) American economist

Source: 1950s-1960s, Social Choice and Individual Values (1951), p. 1: Opening pharagraph

“After society has decided on a social choice rule-a recipe for choosing the optimal social alternative (or alternatives) on the basis of individuals' preferences over the set of all social alternatives-the social planner still faces the problem of how to implement that rule. In particular, the planner may not know individuals' preferences. He might attempt to elicit them, but this may not be an easy task, even abstracting from communication costs. If individuals know the rule by which the planner selects alternatives on the basis of reported preferences, they may have an incentive to report falsely.”

Eric Maskin (1950) American Nobel laureate in economics

Eric Maskin, " Nash equilibrium and welfare optimality http://emlab.whu.edu.cn/syzx/upfiles/20071108083852736.pdf." The Review of Economic Studies 66.1 (1999): 23-38.