Updating Claims in Bankruptcy Problems

M. Josune Albizuri, Justin Leroux and José Zarzuelo ()

No 08-08, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: We reexamine the consistency axiom in bankruptcy problems and propose arguments in favor of an alternative definition of a reduced problem. The classical definition updates the size of the estate while keeping agents' claims unaffected. Instead, we suggest updating agents' claims along with the estate. The resulting consistency axiom characterizes the well-known Random Arrival rule as the unique bilaterally consistent extension of the Contested Garment rule to many agents. We also establish that our definition of a reduced bankruptcy problem corresponds to the definition of a reduced TU game proposed in Hart & Mas-Colell (Econometrica, 1989).

JEL-codes: C7 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2008-08
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (1)

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Journal Article: Updating claims in bankruptcy problems (2010)
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