Dissolving Arrow's Impossibility Theorem

Abstract

Arrow (1950) initiates an economic model for democratic game, but ends up with a dictatorship conclusion. This paper combines the behaviors of politicians and voters to solve the democratic problem. It shows that democracy is costly. The cost and utility considerations give rise to winner or loser from polling. They also affect the decision of voters. Democracy is more rational in well educated countries, while poorer and less educated ones are likely to fall into hands of dictators.