A proportional approach to bankruptcy. Problems with a guaranteed minimum
In a distribution problem, and specifically in bankruptcy issues, the Proportional (P) and theEgalitarian (EA) divisions are two of the most popular ways to resolve the conflict. TheConstrained Equal Awards rule (CEA) is introduced in bankruptcy literature to ensure that noagent receives more than her claim, a problem that can arise when using the egalitarian division.We propose an alternative modification, by using a convex combination of P and EA. Therecursive application of this new rule finishes at the CEA rule. Our proposal ensures a minimumamount to each agent, and distributes the remaining estate in a proportional way.
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