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From the bankruptcy problem and its Concede-and-Divide solution to the assignment problem and its Fair Division solution

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  • Trudeau, Christian

Abstract

We revisit two classic problems: the assignment problem, in which matched pairs of agents create value, and the bankruptcy problem, in which we need to share an endowment among agents with conflicting claims. Since Core Selection constrains us to exactly divide the value created by matched agents, the assignment problem corresponds to multiple two-player bankruptcy problems. From this we obtain equivalence between the Concede-and-Divide (Aumann and Maschler, 1985) sharing method for the bankruptcy problem and the Fair Division solution (Thompson, 1981) for the assignment problem.

Suggested Citation

  • Trudeau, Christian, 2018. "From the bankruptcy problem and its Concede-and-Divide solution to the assignment problem and its Fair Division solution," Games and Economic Behavior, Elsevier, vol. 108(C), pages 225-238.
    • Handle: RePEc:eee:gamebe:v:108:y:2018:i:c:p:225-238
    DOI: 10.1016/j.geb.2017.09.005
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    More about this item

    Keywords

    Assignment problems; Bankruptcy problems; Core; Fair division; Concede-and-divide; Minimal rights;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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