Krugman's whole attack is directed at a statement made neither by Arthur nor by Cassidy. Krugman has not read Cassidy's piece with any care nor has h… - Kenneth Arrow

The formal structure of a decision problem in any area can be put into four parts: (1) the choice of an objective function defining the relative desirability of different outcomes; (2) specification of the policy alternatives which are available to the agent, or decision-maker, (3) specification of the model, that is, empirical relations that link the objective function, or the variables that enter into it, with the policy alternatives and possibly other variables; and (4) computational methods for choosing among the policy alternatives that one which performs best as measured by the objective function.

To the extent that individuals are really individual, each an autonomous end in himself, to that extent they must be somewhat mysterious and inaccessible to each other. There cannot be any rule that is completely acceptable to all. There must, or so it now seems tome, be the possibility of unadjudicable conflict, which may show itself logically as paradoxes in the process of social decision-making.

Certainly, there is no general principle that prevents the creation of an economic theory based on other hypotheses than that of rationality.