Abstract:
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We investigate manipulability in the setting of financial systems by considering two weak forms of immunity: non-manipulability via merging and non-
manipulability via splitting. Not surprinsingly, non-manipulability via splitting
is incompatible with some basic axioms: claim boundedness, limited liability, and
absolute priority. Outstandingly, we introduce a large class of financial rules that
are immune to manipulations via merging. This class includes the proportional
financial rule but also financial rules in accordance with parametric bankruptcy
rules fulfilling non-manipulability via merging.
Keywords: financial systems, manipulability via merging, manipulability via
splitting, parametric bankruptcy rules
JEL: C71 |