A Noncooperative View of Consistent Bankruptcy Rules

Authors: 
Nir Dagan, Roberto Serrano & Oscar Volij
Abstract: 

We introduce a game form that captures a non-cooperative 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 respective consistent bankruptcy rule as a result of a unique outcome of subgame perfect equilibria. The result holds for a large class of consistent and monotone rules, including the Constrained Equal Award, the Proportional and many other well-known rules. Moreover, for a large class of rules, all the subgame perfect equilibria are coalition-proof.

Date: 
December, 1993
Published in: 
Games and Economic Behavior 18 (1997), 55-72
Number: 
37