Maurice Allais was a prominent French economist. Known as a pioneer in his research on market equilibrium and efficiency, Allais was awarded the 1988 Nobel Prize in economics. His study of human risk behavior led to his widely regarded "Allais paradox."
Maurice Allais died on Oct. 9, 2010.
- Maurice Allais was a French economist who won the Nobel Prize in economics in 1988.
- He taught at the University of Paris and the University of Virginia.
- Allais contributed to economic policy reform in Europe after World War II.
Early Life and Education
Maurice Allais was born on May 31, 1911, in Paris, France. He studied economics and graduated from the Ecole Polytechnique in 1933. Allais spent his career at the Nantes Mines and Quarries Service in France as an engineer and manager until his retirement in 1980.
Allais taught economic analysis at the École Nationale Supérieure des Mines de Paris and served as a visiting professor at the University of Paris and the University of Virginia.
Maurice Allais contributed to national economic policies through his research in market equilibrium, capital theory, monetary dynamics, and decision theory.
Following World War II, Allais was an active contributor to economic reform policies during the formation of the European Economic Community in 1958. He determined factors for the distribution of income and defined specific conditions for maximum efficiency of the economy. Allais also sought to balance social benefits with economic efficiency in the pricing plans of state-owned monopolies such as utility companies. His principles aided state enterprises to revise the pricing of goods or services formerly achieved through regulation alone. Allais advised all economies must organize on a decentralized basis for efficiency and to make the best use of their resources.
The Allais Paradox
In 1952, Maurice Allais challenged the assumptions of expected utility theory. Stating that individuals will always choose an option with the greatest reward, the theory used quantitative means to predict behavior and influenced economic decisions at the time.
The Allais paradox, however, proved that when people are required to make immediate choices or quick decisions, they often give inconsistent answers, weakening the expected utility theory's quantitative ability to predict human behavior.
In 1979, the Allais paradox was formally incorporated into the study of behavioral economics by Amos Tversky and Daniel Kahneman, authors of Thinking, Fast and Slow. The book defines two systems of decision making: instinctive and emotional; and deliberate and logical. Both systems make quantifiable predictions of human behavior difficult, as Maurice Allais had concluded.
While most international economists standardized their research in English, Allais published his findings strictly in French. The American economist, Paul Samuelson, received a Nobel Prize for similar research as Maurice Allais. Samuelson noted, "a generation of economic theory would have taken a different course," had Allais' earlier works been known in English. Allais was eventually recognized in 1988 with a Nobel Prize for his "rigorous mathematical formulations of market equilibrium and the efficiency properties of markets."
Maurice Allais began publishing his theories during the 1940s. His first book, A la Recherche d'une Discipline Economique (In Quest of an Economic Discipline), provided Allais' proof that the state of equilibrium in a market economy is also the state of maximum efficiency.
Allais's second book, Economie et Intérêt (Economy and Interest) focused on capital theory and trade-offs between present and future productivity. He argued that real income grows most efficiently when interest rates and growth rates are equal.
His additional books include Economic Pure et Rendement Social (Pure Economics and Social Efficiency), Prolégomenes a la Reconstruction économique du Monde (Prolegomena for the World Economic Reconstruction), and Abondance ou Misère (Abundance or Misery).
Where Is the Allais Paradox Often Applied?
The Allais paradox can be used to describe human gambling behavior. Because gamblers are required to think quickly and provide immediate choices, the result is often inconsistent. This inconsistency weakens the ability to quantify how people behave while gambling or playing a game.
Which Economists Influenced Maurice Allais?
Allais shared the philosophy of Alexis de Tocqueville, Leon Walras, Vilfredo Pareto, and John Maynard Keynes.
How Has Maurice Allais Influenced International Research?
He was a member of several academies and societies, including the Institut de France, the U.S. National Academy of Sciences, the Lincean Academy in Italy, and the Russian Academy of Sciences.
The Bottom Line
Maurice Allais contributed to post-WW II economic planning through his studies in market efficiency and equilibrium. His analysis of economic decision-making under conditions of risk and uncertainty evolved as the Allais paradox.