A Proportional Approach to Bankruptcy Problems with a guaranteed minimum

José-Manuel Giménez-Gómez () and Josep E. Peris

Working Papers from Universitat Rovira i Virgili, Department of Economics

Abstract: In a distribution problem, and specfii cally 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 cation, by using a convex combination of P and EA. The recursive application of this new rule finishes 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. JEL classi fication: C71, D63, D71.

Keywords: Fallida; Jocs cooperatius; Economia del benestar; Elecció social; 33 - Economia (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (1)

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http://hdl.handle.net/2072/182645

Related works:
Working Paper: A proportional approach to bankruptcy. Problems with a guaranteed minimum (2012)
Working Paper: A Proportional Approach to Bankruptcy Problems with a guaranteed minimum (2012)
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