Relations among the central rules in bankruptcy problems: A strategic perspective

Min-Hung Tsay and Chun-Hsien Yeh

Games and Economic Behavior, 2019, vol. 113, issue C, 515-532

Abstract: We consider the “bankruptcy problem”, in which the liquidation value of a bankrupt firm has to be allocated among its creditors. By applying the Nash program to justify a bilaterally consistent rule, bilateral negotiations are traditionally resolved by applying the rule (Dagan et al., 1997; Chang and Hu, 2008). We introduce games in which bilateral negotiations are resolved by non-cooperative bargaining procedures and show that these games strategically justify the constrained equal awards rule, the constrained equal losses rule, the proportional rule, and the Talmud rule. By focusing on the differences in the non-cooperative bargaining procedures that capture the spirit of the rules, our results unveil novel connections among them.

Keywords: Nash program; Bankruptcy problem; Bankruptcy rules; Strategic justification; Consistency (search for similar items in EconPapers)
JEL-codes: C71 C72 D63 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825618301751
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:113:y:2019:i:c:p:515-532

DOI: 10.1016/j.geb.2018.10.012

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().