An Arrow security is an instrument with a fixed payout of one unit in a specified state and no payout in other states. It is a type of hypothetical asset used in the Arrow market structure model. In contrast to the Arrow-Debreu market structure model, an Arrow market is a market in which the individual agents engage in trading assets at every time period t. In an Arrow-Debreu model, trading occurs only once at the beginning of time. An Arrow Security is an asset traded in an Arrow market structure model which encompasses a complete market. Arrow Security is also called State Contingent Claim, Supershare Option.
- Lengwiler, Yvan. Microfoundations of financial economics: an introduction to general equilibrium asset pricing. Princeton University Press, 2009. p. 41.