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Notes on the Bankruptcy Problem: an Application of Hydraulic Rationing

Author

Listed:
  • Tamas Fleiner

    () (Budapest University of Economics and Technology - Department of Computer Science and Information Theory)

  • Balazs Sziklai

    () (Institute of Economics - Hungarian Academy of Sciences)

Abstract

We offer a new approach to the well-known bankruptcy problem based on Kaminski's idea. With the help of hydraulic rationing we give a proof to Aumann and Maschlers theorem i.e. the consistent solution of a bankruptcy problem is the nucleolus of the corresponding game. We use a system of vessels and water and the principles of mechanics to show this fact. The proof is not just simple and demonstrative but also provides an insight how the nucleolus is constructed in such games.

Suggested Citation

  • Tamas Fleiner & Balazs Sziklai, 2011. "Notes on the Bankruptcy Problem: an Application of Hydraulic Rationing," IEHAS Discussion Papers 1123, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  • Handle: RePEc:has:discpr:1123
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    File URL: http://econ.core.hu/file/download/mtdp/MTDP1123.pdf
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    References listed on IDEAS

    as
    1. Moreno-Ternero, Juan D. & Villar, Antonio, 2004. "The Talmud rule and the securement of agents' awards," Mathematical Social Sciences, Elsevier, vol. 47(2), pages 245-257, March.
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    More about this item

    Keywords

    bankruptcy problem; nucleolus; hydraulic rationing;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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