A Noncooperative View of Consistent Bankruptcy Rules

• Published in: Games and economic behavior Vol. 18; no. 1; pp. 55 - 72
• Main Authors: Dagan, Nir, Serrano, Roberto, Volij, Oscar
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01-01-1997; Elsevier
• Series: Games and Economic Behavior
• Subjects: Bankruptcy; Economic behaviour; Economic cooperation; Game theory
• ISSN: 0899-8256; 1090-2473
• DOI: 10.1006/game.1997.0526

We introduce a game form that captures a noncooperative dimension of the consistency property of bankruptcy rules. Any consistent and monotone rule is fully characterized by a bilateral principle and consistency. Like the consistency axiom, our game form, together with a bilateral principle, yields the corresponding consistent bankruptcy rule as a result of a unique outcome of Nash equilibria. The result holds for a large class of consistent and monotone rules, including the Constrained Equal Award, the Propositional Rule, and many other well known rules. Moreover, all of the subgame perefect equilibria are coalition-proof in the associated game in strategic form.Journal of Economic LiteratureClassification Numbers: C72 and D63.