A Proportional Approach to Bankruptcy Problems with a guaranteed minimum

Josep E. Peris and José M. Jiménez-Gómez ()
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José M. Jiménez-Gómez: Universitat Rovira i Virgili, Department d'Economia CREIP and GRODE, Postal: Av. de la Universitat 1, 43204 Reus, Spain.
Authors registered in the RePEc Author Service: José-Manuel Giménez-Gómez ()

No 12-7, QM&ET Working Papers from University of Alicante, D. Quantitative Methods and Economic Theory

Abstract: In a distribution problem, and speci fically in bankruptcy issues, the Proportional (P) and the Egalitarian (EA) divisions are two of the most popular ways to resolve the conflict. The Constrained Equal Awards rule (CEA) is introduced in bankruptcy literature to ensure that no agent receives more than her claim, a problem that can arise when using the egalitarian division. We propose an alternative modi fication, by using a convex combination of P and EA. The recursive application of this new rule fi nishes at the CEA rule. Our solution concept ensures a minimum amount to each agent, and distributes the remaining estate in a proportional way.

Keywords: Bankruptcy problems; Proportional rule; Equal Awards; Convex combination of rules; Lorenz dominance (search for similar items in EconPapers)
JEL-codes: C71 D63 D71 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-03-22
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 (3)

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Related works:
Working Paper: A proportional approach to bankruptcy. Problems with a guaranteed minimum (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:qmetal:2012_007

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