Bankruptcy problems with reference-dependent preferences
Andrea Gallice ()
International Journal of Game Theory, 2019, vol. 48, issue 1, No 13, 336 pages
Abstract I study bankruptcy problems under the assumption that claimants have reference-dependent preferences. I consider different specifications for claimants’ reference points and show how perceived gains and losses impact on aggregate welfare. I can thus rank the four most prominent rules (Proportional, Constrained Equal Awards, Constrained Equal Losses, and Talmud) on the basis of the level of utilitarian and maxmin welfare that they generate. I also identify the welfare-maximizing rules and discuss their properties.
Keywords: Bankruptcy problems; Reference-dependent preferences; Reference points; Utilitarian welfare; Maxmin welfare (search for similar items in EconPapers)
JEL-codes: D03 D63 (search for similar items in EconPapers)
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Working Paper: Bankruptcy Problems with Reference-Dependent Preferences (2018)
Working Paper: Bankruptcy Problems with Reference-Dependent Preferences (2016)
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