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

Arrow-Debreu model

In mathematical economics, the Arrow–Debreu model suggests that under certain economic assumptions there must be a set of prices such that aggregate supplies will equal aggregate demands for every commodity in the economy.The model is central to the theory of...

, an Arrow market is a market in which the individual agents engage in trading asset

Asset

In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...

s 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.