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A Proportional Approach to Bankruptcy Problems with a guaranteed minimum

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  • Peris, Josep E.

    ()
    (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica)

  • Jiménez-Gómez, José M.

    ()
    (Universitat Rovira i Virgili, Department d'Economia CREIP and GRODE)

Abstract

In a distribution problem, and speci fically in bankruptcy issues, the Proportional (P) and the Egalitarian (EA) divisions are two of the most popular ways to resolve the conflict. The Constrained Equal Awards rule (CEA) is introduced in bankruptcy literature to ensure that no agent receives more than her claim, a problem that can arise when using the egalitarian division. We propose an alternative modi fication, by using a convex combination of P and EA. The recursive application of this new rule fi nishes at the CEA rule. Our solution concept ensures a minimum amount to each agent, and distributes the remaining estate in a proportional way.

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Bibliographic Info

Paper provided by Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica in its series QM&ET Working Papers with number 12-7.

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Length: 23 pages
Date of creation: 22 Mar 2012
Date of revision:
Handle: RePEc:ris:qmetal:2012_007

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Keywords: Bankruptcy problems; Proportional rule; Equal Awards; Convex combination of rules; Lorenz dominance;

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  1. Dagan, Nir & Serrano, Roberto & Volij, Oscar, 1997. "A Noncooperative View of Consistent Bankruptcy Rules," Games and Economic Behavior, Elsevier, Elsevier, vol. 18(1), pages 55-72, January.
  2. Kristof Bosmans & Luc Lauwers, 2011. "Lorenz comparisons of nine rules for the adjudication of conflicting claims," International Journal of Game Theory, Springer, Springer, vol. 40(4), pages 791-807, November.
  3. Diego Dominguez & William Thomson, 2004. "A New Solution to the Problem of Adjudicating Conflicting Claims," RCER Working Papers 511, University of Rochester - Center for Economic Research (RCER).
  4. Carmen Herrero & Antonio Villar, 2002. "Sustainability in bankruptcy problems," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer, Springer, vol. 10(2), pages 261-273, December.
  5. Juan de Dios Moreno Ternero & Antonio Villar Notario, 2003. "The Talmud Rule And The Securement Of Agents? Awards," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 2003-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  6. Voorneveld, M. & Tijs, S.H. & Grahn, S., 2003. "Monotonic allocation schemes in clan games," Open Access publications from Tilburg University urn:nbn:nl:ui:12-91573, Tilburg University.
  7. Aumann, Robert J. & Maschler, Michael, 1985. "Game theoretic analysis of a bankruptcy problem from the Talmud," Journal of Economic Theory, Elsevier, Elsevier, vol. 36(2), pages 195-213, August.
  8. Thomson, William, 2003. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey," Mathematical Social Sciences, Elsevier, Elsevier, vol. 45(3), pages 249-297, July.
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Cited by:
  1. William Thomson, 2013. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: an update," RCER Working Papers 578, University of Rochester - Center for Economic Research (RCER).
  2. Subiza, Begoña & Silva-Reus, José Ángel & Peris, Josep E., 2013. "Cost sharing solutions de fined by non-negative eigenvectors," QM&ET Working Papers, Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica 13-6, Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica.

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