Giménez-Gómez, J. and J.E. Peris
European Journal of Operational Research – 232, (2014) 109-116

Keywords: Bankruptcy problems, proportional rule, equal Awards, convex combination of rules, lorenz dominance

Abstract: In a distribution problem, and speci fically in bankruptcy issues, the Proportional (P) and the Egalitarian (EA) divisions are two of the most popular ways to resolve the conflict. The Constrained Equal Awards rule (CEA) is introduced in bankruptcy literature to ensure that no agent receives more than her claim, a problem that can arise when using the egalitarian division. We propose an alternative modi fication, by using a convex combination of P and EA. The recursive application of this new rule fi nishes at the CEA rule. Our solution concept ensures a minimum amount to each agent, and distributes the remaining estate in a proportional way.