Priority and Proportionality in Bankruptcy

Karol Flores-Szwagrzak, Jaume García-Segarra, Miguel Ginés-Vilar

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

We study the problem of distributing the liquidation value of a bankrupt firm among its creditors (O’Neill, Math Soc Sci 2(4):345–371, 1982; Aumann and Maschler, J Econ Theory 36(2):195–213, 1985). Real-life distribution rules prioritize predetermined creditor groups, dividing the amount assigned to each group proportionally to claims. We provide the first axiomatic characterization of such rules. In addition to the classical consistency and continuity axioms, these rules are characterized by the following properties: (1) bankruptcy problems with the same claims and where each claimant’s award is positive in each problem can be solved either jointly or separately without altering the recommended awards, (2) a dual property specifying that bankruptcy problems with the same claims and where each claimant’s loss is positive can be solved either jointly or separately without altering the recommended awards.
Original languageEnglish
JournalSocial Choice and Welfare
Number of pages21
ISSN0176-1714
DOIs
Publication statusPublished - 25 Sep 2019

Bibliographical note

Epub ahead of print. Published online: 25. September 2019

Cite this

Flores-Szwagrzak, Karol ; García-Segarra, Jaume ; Ginés-Vilar, Miguel. / Priority and Proportionality in Bankruptcy. In: Social Choice and Welfare. 2019.
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Priority and Proportionality in Bankruptcy. / Flores-Szwagrzak, Karol; García-Segarra, Jaume; Ginés-Vilar, Miguel.

In: Social Choice and Welfare, 25.09.2019.

Research output: Contribution to journalJournal articleResearchpeer-review

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