Scale invariance and similar invariance conditions for bankruptcy problems
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A frequent motivation for the use of scale invariance in the bankruptcy literature is that it imposes that the outcome of a bankruptcy problem does not depend on the units of measurement. We show that this interpretation is not correct. Scale invariance is an invariance condition that applies when all amounts are multiplied by a constant (without change of units). With this interpretation in mind, it is natural to consider other invariance conditions, for example one that applies when all amounts are increased by the same constant. In this paper, we analyze the consequences of several invariance conditions.
KeywordsScale Invariance Invariance Condition Division Rule Proportional Rule Bankruptcy Problem
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