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A New Approach for Bounding Awards in Bankruptcy Problems
Giménez-Gómez, José Manuel; Marco Gil, M. Carmen
Universitat Rovira i Virgili. Departament d'Economia; Universitat Rovira i Virgili. Centre de Recerca en Economia Industrial i Economia Pública
The solution for the ‘Contested Garment Problem’, proposed in the Babylonic Talmud, suggests that each agent should receive at least some part of the resources whenever the demand overcomes the available amount. In this context, we propose a new method to define lower bounds on awards, an idea that has underlied the theoretical analysis of bankruptcy problems from its beginning (O’Neill, 1982) to present day (Dominguez and Thomson, 2006). Specifically, starting from the fact that a society establishes its own set of ‘Commonly Accepted Equity Principles’, our proposal ensures to each agent the smallest amount she gets according to all the admissible rules. As in general this new bound will not exhaust the estate, we analyze its recursive application for different sets of equity principles. Keywords: Bankruptcy problems, Bankruptcy rules, Lower bounds, Recursive process
2012
33 - Economia
Fallida
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34 p.
Working Paper
Universitat Rovira i Virgili. Departament d'Economia
Documents de treball del Departament d'Economia;2012-06
         

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