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Mediation in Bankruptcy Problems

Author

Listed:
  • Peris, Josep E.

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

  • Jiménez-Gómez, José M.

    () (Universitat Rovira i Virgili)

Abstract

Mediation is a dispute resolution process where agents reach a mutually acceptable agreement among prominent proposals. This paper provides a natural way of coming to this agreement in bankruptcy problems. The central fact is that such problems can be faced from two different (focal) points of view: awards and losses. Given this views, we assume that agents decide a group of principles on which the distribution of the available resources should be based. Next we define a double recursive process by the application of both a lower and an upper bound on awards. Finally, we obtain that this process concludes at the midpoint between the two focal rules. By applying the result to some possible sets of principles we retrieve the average of old and well known bankruptcy rules.

Suggested Citation

  • Peris, Josep E. & Jiménez-Gómez, José M., 2012. "Mediation in Bankruptcy Problems," QM&ET Working Papers 12-2, University of Alicante, D. Quantitative Methods and Economic Theory.
  • Handle: RePEc:ris:qmetal:2012_002
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    More about this item

    Keywords

    Bankruptcy problems; Midpoint; Bounds; Recursivity;

    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
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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