How Game Theory Solved a Religious Mystery

A neat twist to the standard pro-rata division we see a lot in bankruptcies. What I like best is this method penalizes the creditor for extending too much credit. Note that the ones who are hurt most by the divide-contested-amount method are the creditors who over-estimated the debtors assets, while the creditors lending smaller amounts get a small bonus over pro-rata. Edit: I think the (estate_size == 150) case sucks for the 200 and 300 creditors, though, because they correctly…

Fascinating. The talmudic-inspired process would reduce to our modern proportional instincts if debt can be subdivided and resold. Consider the case of the 100,200,300 creditors against the debtor with only 100 left. If being owed the larger amount is a disadvantage, the 200 and 300 can each sell their amounts in excess of 100 in 100-unit chunks to third parties. Then, there are 6 creditors each disputing the 100, and all of them get an equal 16.6-. Assuming the original…