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Strong composition down. Characterizations of new and classical bankruptcy rules

Author

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  • Ricardo Martinez

    () (Department of Economic Theory, Universidad de Málaga)

Abstract

This paper is devoted to the study of claims problems. We identify the family of rules that satisfy strong composition down (robustness with respect to reevaluations of the estate) and consistency (robustness with respect to changes in the set of agents) together. Such a family is the Þxed path rules, which is a generalization of the weighted constrained equal awards rules. In addition, once strong composition down and consistency are combined with homogeneity only the weighted constrained equal awards rules survive. We also prove that the constrained equal awards rule is the only rule that satisÞes strong composition down, consistency and equal treatment of equals together.

Suggested Citation

  • Ricardo Martinez, 2009. "Strong composition down. Characterizations of new and classical bankruptcy rules," Working Papers 2009-4, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    • Handle: RePEc:mal:wpaper:2009-4
    as

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    File URL: http://webdeptos.uma.es/THEconomica/malagawpseries/Papers/METCwp2009-4.pdf
    File Function: First version, 2009
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    References listed on IDEAS

    as
    1. Youngsub Chun, 1999. "Equivalence of axioms for bankruptcy problems," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(4), pages 511-520.
    2. William Thomson, 2011. "Consistency and its converse: an introduction," Review of Economic Design, Springer;Society for Economic Design, vol. 15(4), pages 257-291, December.
    3. Youngsub Chun, 1999. "Equivalence of Axioms for Bankruptcy Problems," Working Paper Series no1, Institute of Economic Research, Seoul National University.
    4. Young, H. P., 1988. "Distributive justice in taxation," Journal of Economic Theory, Elsevier, vol. 44(2), pages 321-335, April.
    5. Herrero, Carmen & Villar, Antonio, 2001. "The three musketeers: four classical solutions to bankruptcy problems," Mathematical Social Sciences, Elsevier, vol. 42(3), pages 307-328, November.
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    Cited by:

    1. Thomson, William, 2015. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: An update," Mathematical Social Sciences, Elsevier, vol. 74(C), pages 41-59.

    More about this item

    Keywords

    strong composition down; Þxed path rules; constrained equal awards rule; weighted constrained equal awards rules;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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