Flow sharing and bankruptcy games |
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Authors: | Endre Bjørndal Kurt Jörnsten |
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Affiliation: | 1. Department of Accounting, Auditing and Law, Norwegian School of Economics and Business Administration, Helleveien 30, 5045, Bergen, Norway 2. Department of Finance and Management Science, Norwegian School of Economics and Business Administration, Helleveien 30, 5045, Bergen, Norway
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Abstract: | We discuss the relationship between bankruptcy problems and flow sharing problems, respectively, and show that the latter type of problem can be interpreted as a generalization of the former. The corresponding flow sharing game is convex, hence we can use the converse reduced game property to characterize the nucleolus and the constrained egalitarian solution. Our main contribution is thus to introduce the nucleolus as an alternative solution concept for flow sharing problems, and to offer a game-theoretic interpretation of the traditional egalitarian solution. |
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