An Ancient Bankruptcy Solution Makes Economic Sense

  • Anh H. Ly
  • Michael Zakharevich
  • Olga Kosheleva
  • Vladik Kreinovich
Conference paper
Part of the Studies in Computational Intelligence book series (SCI, volume 760)

Abstract

While econometrics is a reasonable recent discipline, quantitative solutions to economic problem have been proposed since the ancient times. In particular, solutions have been proposed for the bankruptcy problem: how to divide the assets between the claimants? One of the challenges of analyzing ancient solutions to economics problems is that these solutions are often presented not as a general algorithm, but as a sequence of examples. When there are only a few such example, it is often difficult to convincingly extract a general algorithm from them. This was the case, for example, for the supposedly fairness-motivated Talmudic solution to the bankruptcy problem: only in the mid 1980s, the Nobelist Robert Aumann succeeded in coming up with a convincing general algorithm explaining the original examples. What remained not so clear in Aumann’s explanation is why namely this algorithm best reflects the corresponding idea of fairness. In this paper, we find a simple economic explanation for this algorithm.

Notes

Acknowledgments

This work was supported in part by the National Science Foundation grant HRD-1242122 (Cyber-ShARE Center of Excellence).

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Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  • Anh H. Ly
    • 1
  • Michael Zakharevich
    • 2
  • Olga Kosheleva
    • 3
  • Vladik Kreinovich
    • 3
  1. 1.Banking University of Ho Chi Minh CityHo Chi Minh CityVietnam
  2. 2.SeeCure Systems, Inc.BelmontUSA
  3. 3.University of Texas at El PasoEl PasoUSA

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