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Maurice Allais (1991)      

An independent-minded French economist, Maurice Allais strove to carry the message of the original Lausanne School of Leon Walras and Vilfredo Pareto into the modern era, through what we have called the Paretian Revolution of the 1930s. Maurice Allais wrote two major treatises in the 1940s, Á la Recherche d'une discipline économique (1943) and Economique et interet (1947) whose inspiration was to a great part derived 'from meditation upon the works of Leon Walras, Irving Fisher and especially Vilfredo Pareto, three great masters who deeply influenced me' (Allais, 1992). In his 1943 opus, Allais provided the groundwork for much of the Paretian system, including the first proofs of the Fundamental Welfare Theorems in both a static and intetemporal framework. He went on to unveil what are now standard ideas about market failures in a general equilibrium setting. Recognizing the potential implications of natural monopolies, transactions costs and unnatural rents on market efficiency, Allais made several quite 'radical' policy proposals. His affinity to the old Lausanne school extended to the points on policy, e.g. sharing the latter's call for the complete nationalization of land and massive income redistribution by capital taxation.
Among his contributions in 1947 was the invention of the now-famous 'overlapping generations' (OLG) model (before Paul Samuelson). Allais also introduced the 'Golden Rule' for optimal growth. The contribution Allais is generally best known for in the Anglo-Saxon world is the Allais Paradox in the theory of choice under uncertainty - which he presented in a series of papers in 1953. Succinctly, the paradox claims that the assumptions made in conventional expected utility theory contradict real life decisions - specifically, Allais finds behavior which contradicts the expected utility rule. The idea introduced by Allais is that there is a systematic relationship between an agent's attitude towards risk and the 'degree of certainty', what was later called the 'common consequence effect'. Discovering this paradox, Allais led the way to new attempts at formulating new theories of decision-making under uncertainty (e.g. 1983, 1984, 1986, 1988, 1991). Maurice Allais's legacy is mixed. Through his two major works (1943, 1947) and as mentor of two of the most prominent pioneers of Neo-Walrasian theory, Gerard Debreu and Edmond Malinvaud, Allais channeled numerous concerns of the original Lausanne School economists into the post-war General Equilibrium program. Today, he might be best known for his development of the Allais Paradox in uncertainty theory, but most of Allais's highly original contributions - notably his surplus theory of exchange and stability and his unique 'psychological-relativistic' theory of money (1966, 1972, 1974, 1975) - have been either completely ignored or surreptitiously stolen by the mainstream economics establishment without due acknowledgement.
Nonetheless, despite the numerous setbacks during his professional career, Maurice Allais was vindicated by being made an officer of the Legion of Honor in 1977 and a richly-deserved Nobel Memorial prize in 1988.

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