Maurice Allais
Citation: For his pioneering contributions to the theory of markets and efficient utilization of resources.
The key idea
The Allais Paradox: real human choices violate expected-utility theory. Markets reach efficiency through cycles of disequilibrium, not the smooth adjustment of textbooks.
The explanation
Allais's 1953 experiments showed that people systematically violate the independence axiom of expected utility — choices reversed under common-consequence framings. His parallel work in monetary economics and capital theory laid groundwork for the modern theory of intertemporal economics.
Why Africa should care
Behavioural-finance findings in African markets routinely show Allais-style violations: smallholder farmers' insurance decisions, microcredit borrowing patterns, and pension contribution choices all exhibit common-consequence sensitivities. Product design that respects these deviations (e.g., framing premium subsidies as discounts vs rebates) routinely doubles take-up rates.
How to use it
Test whether your customers exhibit the Allais paradox before assuming they maximise expected utility. Behavioural product design (defaults, framing, anchoring) responds to the deviations Allais documented.
Canonical works
- Maurice Allais (1953) "Le comportement de l'homme rationnel devant le risque: critique des postulats et axiomes de l'école américaine" Econometrica
More from Quantification and markets · 1980-1989
- 1980Lawrence Klein
Build large-scale macroeconometric models of the entire economy. Feed in policy assumptions, simulate, compare outcomes.
- 1981James Tobin
Tobin's q (the ratio of market value to replacement cost of capital) drives investment. Portfolio choice models how investors allocate between risky and safe assets.
- 1982George Stigler
Information is costly. Markets and regulation should be analysed as the outcome of rational behaviour by participants — including regulators, who are 'captured' by the industries they oversee.
- 1983Gerard Debreu
The Arrow-Debreu existence proof, in its mathematically definitive form: under specified convexity and continuity conditions, a competitive equilibrium exists.
- 1984Richard Stone
A unified, double-entry national-accounts system that integrates production, income, expenditure, and balance-sheet flows.