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A Proportional Approach to Bankruptcy Problems with a guaranteed minimum

  • Giménez-Gómez, José Manuel
  • Peris, Josep E.

In a distribution problem, and specfii cally in bankruptcy issues, the Proportional (P) and the Egalitarian (EA) divisions are two of the most popular ways to resolve the conflict. The Constrained Equal Awards rule (CEA) is introduced in bankruptcy literature to ensure that no agent receives more than her claim, a problem that can arise when using the egalitarian division. We propose an alternative modi cation, by using a convex combination of P and EA. The recursive application of this new rule finishes at the CEA rule. Our solution concept ensures a minimum amount to each agent, and distributes the remaining estate in a proportional way. Keywords: Bankruptcy problems, Proportional rule, Equal Awards, Convex combination of rules, Lorenz dominance. JEL classi fication: C71, D63, D71.

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File URL: http://hdl.handle.net/2072/182645
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Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/182645.

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Date of creation: 2012
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Handle: RePEc:urv:wpaper:2072/182645
Contact details of provider: Postal: Avda. de la Universitat,1 - 43204 Reus (Tarragona)
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  1. Kristof Bosmans & Luc Lauwers, 2011. "Lorenz comparisons of nine rules for the adjudication of conflicting claims," International Journal of Game Theory, Springer, vol. 40(4), pages 791-807, November.
  2. Diego Dominguez & William Thomson, 2004. "A New Solution to the Problem of Adjudicating Conflicting Claims," RCER Working Papers 511, University of Rochester - Center for Economic Research (RCER).
  3. Carmen Herrero & Antonio Villar, 2002. "Sustainability in bankruptcy problems," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer, vol. 10(2), pages 261-273, December.
  4. Juan de Dios Moreno Ternero & Antonio Villar Notario, 2003. "The Talmud Rule And The Securement Of Agents? Awards," Working Papers. Serie AD 2003-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Dagan, Nir & Serrano, Roberto & Volij, Oscar, 1997. "A Noncooperative View of Consistent Bankruptcy Rules," Games and Economic Behavior, Elsevier, vol. 18(1), pages 55-72, January.
  6. Aumann, Robert J. & Maschler, Michael, 1985. "Game theoretic analysis of a bankruptcy problem from the Talmud," Journal of Economic Theory, Elsevier, vol. 36(2), pages 195-213, August.
  7. 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.
  8. repec:ner:tilbur:urn:nbn:nl:ui:12-91573 is not listed on IDEAS
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