Notes on the Bankruptcy Problem: an Application of Hydraulic Rationing

Tamas Fleiner () and Balázs Sziklai
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Tamas Fleiner: Budapest University of Economics and Technology - Department of Computer Science and Information Theory

No 1123, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: We offer a new approach to the well-known bankruptcy problem based on Kaminski's idea. With the help of hydraulic rationing we give a proof to Aumann and Maschlers theorem i.e. the consistent solution of a bankruptcy problem is the nucleolus of the corresponding game. We use a system of vessels and water and the principles of mechanics to show this fact. The proof is not just simple and demonstrative but also provides an insight how the nucleolus is constructed in such games.

Keywords: bankruptcy problem; nucleolus; hydraulic rationing (search for similar items in EconPapers)
JEL-codes: C71 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2011-05
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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