Divide and choose: An informationally robust strategic approach to bankruptcy problems

B-Tier
Journal: Journal of Mathematical Economics
Year: 2023
Volume: 107
Issue: C

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper proposes a simple and general strategic approach for analyzing bankruptcy problems. We construct three strategic bargaining games and show that they yield unique subgame perfect equilibrium (SPE) outcomes that coincide with the allocations given by the three prominent solution concepts, the constrained equal awards rule, the constrained equal losses rule and the Talmud rule, respectively. We also discuss the robustness of the result in the presence of certain incomplete information. The approach can be readily extended to study alternative solutions for bankruptcy problems or other settings such as surplus sharing problems, and is further enriched by considering a voting stage. Central to all these bargaining protocols is an extended and context-fitting “divide-and-choose” mechanism.

Technical Details

RePEc Handle
repec:eee:mateco:v:107:y:2023:i:c:s0304406823000551
Journal Field
Theory
Author Count
2
Added to Database
2026-01-25