A bankruptcy problem,[1] also called a claims problem,[2] is a problem of distributing a homogeneous divisible good (such as money) among people with different claims. The focus is on the case where the amount is insufficient to satisfy all the claims.
The canonical application is a bankrupt firm that is to be liquidated. The firm owes different amounts of money to different creditors, but the total worth of the company's assets is smaller than its total debt. The problem is how to divide the scarce existing money among the creditors.
Another application would be the division of an estate amongst several heirs, particularly when the estate cannot meet all the deceased's commitments.
A third application[2] is tax assessment. One can consider the claimants as taxpayers, the claims as the incomes, and the endowment as the total after-tax income. Determining the allocation of total after-tax income is equivalent to determining the allocation of tax payments.
- ^ Cite error: The named reference
:0was invoked but never defined (see the help page). - ^ a b Thomson, William (2003-07-01). "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey". Mathematical Social Sciences. 45 (3): 249–297. doi:10.1016/S0165-4896(02)00070-7. ISSN 0165-4896.
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