Abstract:
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The solution for the ‘Contested Garment Problem’, proposed in the Babylonic
Talmud, suggests that each agent should receive at least some part of the resources
whenever the demand overcomes the available amount. In this context, we
propose a new method to define lower bounds on awards, an idea that has underlied
the theoretical analysis of bankruptcy problems from its beginning (O’Neill, 1982)
to present day (Dominguez and Thomson, 2006). Specifically, starting from the fact
that a society establishes its own set of ‘Commonly Accepted Equity Principles’, our
proposal ensures to each agent the smallest amount she gets according to all the admissible
rules. As in general this new bound will not exhaust the estate, we analyze
its recursive application for different sets of equity principles.
Keywords: Bankruptcy problems, Bankruptcy rules, Lower bounds, Recursive
process |