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Distributive Concerns in the Bankruptcy Problem with an Endogenous Estate

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  • Karagozoglu Emin

    (METEOR)

Abstract

We compare certain bankruptcy rules in a bankruptcy model with an endogenous estate on the basis of normative criteria. In particular, five properties related to distributive concerns are analyzed: minimal rights first, securement of initial investments, initial investments first, reasonable lower bounds on awards, and reasonable lower bounds on losses. The proportional rule receives the strongest support from this normative analysis among the rules considered. We also observe that the performance of the proportional rule improves in the family of bankruptcy problems with endogenous estates compared to the general set of bankruptcy problems. Our results complement those in Karagozoglu (2008) and provide a broader perspective to bankruptcy problems with endogenous estates.

Suggested Citation

  • Karagozoglu Emin, 2008. "Distributive Concerns in the Bankruptcy Problem with an Endogenous Estate," Research Memorandum 032, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  • Handle: RePEc:unm:umamet:2008032
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    References listed on IDEAS

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    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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    3. Emin Karagözoğlu, 2014. "A noncooperative approach to bankruptcy problems with an endogenous estate," Annals of Operations Research, Springer, vol. 217(1), pages 299-318, June.
    4. Hervé Moulin, 2000. "Priority Rules and Other Asymmetric Rationing Methods," Econometrica, Econometric Society, vol. 68(3), pages 643-684, May.
    5. Chun-Hsien Yeh, 2006. "Protective Properties and the Constrained Equal Awards Rule for Claims Problems: A Note," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 27(2), pages 221-230, October.
    6. Kristof Bosmans & Luc Lauwers, 2011. "Lorenz comparisons of nine rules for the adjudication of conflicting claims," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(4), pages 791-807, November.
    7. James Konow, 2000. "Fair Shares: Accountability and Cognitive Dissonance in Allocation Decisions," American Economic Review, American Economic Association, vol. 90(4), pages 1072-1091, September.
    8. Thomson, William, 2003. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey," Mathematical Social Sciences, Elsevier, vol. 45(3), pages 249-297, July.
    9. Oliver Hart, 2000. "Different Approaches to Bankruptcy," NBER Working Papers 7921, National Bureau of Economic Research, Inc.
    10. Hougaard, Jens Leth & Osterdal, Lars Peter, 2005. "Inequality preserving rationing," Economics Letters, Elsevier, vol. 87(3), pages 355-360, June.
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    Cited by:

    1. Emin Karagözoğlu, 2014. "A noncooperative approach to bankruptcy problems with an endogenous estate," Annals of Operations Research, Springer, vol. 217(1), pages 299-318, June.
    2. 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.

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