Arrow's theorem and group decision making on public policy

by Alain A. Lewis

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An inquiry is made into the appropriate use of Arrow's celebrated Possibility Theorem in Welfare Economics as applied to the decisions of public policy. It is argued that the result of this theorem, while certainly a significant tool for theory, should not be interpreted as an impediment to group decisionmaking as it occurs in the context of representative groups. More importantly, there are real and tangible problems of aligning group interests, benefits, and perceptions of uncertainty that must be dealt with. A model of decisionmaking based on Wilson's "Theory of Syndicates" is proposed as an alternative approach.

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