On manipulability in financial systems

Peter Sudhölter, Pedro Calleja () and Francesc Llerena ()
Additional contact information
Pedro Calleja: Departament de Matemàtica Econòmica, Financera i Actuarial, Postal: Universitat de Barcelona-BEAT, Av. Diagonal 690 , 08034 Barcelona, Spain
Francesc Llerena: Departament de Gestió d’Empreses, Postal: Universitat Rovira i Virgili-ECO-SOS, Av. de la Universitat 1 , 43204 Reus , Spain

No 8/2021, Discussion Papers on Economics from University of Southern Denmark, Department of Economics

Abstract: We investigate manipulability in the setting of financial systems by considering two weak forms of immunity: non-manipulability via merging and non-manipulability via splitting. Not surprisingly, non-manipulability via splitting is incompatible with some basic axioms: claim boundedness, limited liability, and absolute priority. Outstandingly, we introduce a large class of financial rules that are immune to manipulations via merging. This class includes the proportional financial rule We investigate manipulability in the setting of financial systems by considering two weak forms of immunity: non-manipulability via merging and non-manipulability via splitting. Not surprisingly, non-manipulability via splitting is incompatible with some basic axioms: claim boundedness, limited liability, and absolute priority. Outstandingly, we introduce a large class of financial rules that are immune to manipulations via merging. This class includes the proportional financial rule but also financial rules in accordance with parametric bankruptcy rules fulfilling non-manipulability via merging.

Keywords: Financial systems; manipulability via merging; manipulability via splitting; parametric bankruptcy rules (search for similar items in EconPapers)
JEL-codes: C71 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2021-12-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.sdu.dk/-/media/files/om_sdu/institutte ... cial+systemsver1.pdf Full text file (application/pdf)

Related works:
Working Paper: On manipulability in financial systems (2021)
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:hhs:sdueko:2021_008

Access Statistics for this paper

More papers in Discussion Papers on Economics from University of Southern Denmark, Department of Economics Department of Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Astrid Holm Nielsen ().