Lorenz and lexicographic maximal allocations for bankruptcy problems

  1. Arin Aguirre, Francisco Javier
  2. Benito Ostolaza, Juan Miguel
Journal:
Documentos de Trabajo ( Universidad Pública de Navarra. Departamento de Economía )

Year of publication: 2012

Issue: 2

Type: Working paper

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Abstract

This paper investigates the use of egalitarian criteria to select allocations in bankruptcy problems. In our work, we characterize the sets of Lorenz maximal elements for these problems. We show that the allocation selected by the Proportional Rule is the only allocation that belongs to all these Lorenz maximal sets. We prove that the Talmud Rule selects the lexicographic maximal element within a certain set. We introduce and analyze a new sharing rule for bankruptcy problems that shares strong similarities with the Talmud Rule.

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