# 14-030/II (2014-03-04)

Arantza Estévez-Fernández, VU University Amsterdam; Peter Borm, Tilburg University, the Netherlands; M. Gloria Fiestras-Janeiro, Universidade de Vigo, Spain
NTU-bankruptcy problem, NTU-bankruptcy game, Coalitional merge convexity, Ordinal convexity, Compromise stability, Core cover, Adjusted proportional rule
JEL codes:

In this paper, we analyze bankruptcy problems with nontransferable utility (NTU) from a game theoretical perspective by redefining corresponding NTU-bankruptcy games in a tailor-made way. It is shown that NTU-bankruptcy games are both coalitional merge convex and ordinal convex. Generalizing the notions of core cover and compromise stability for transferable utility (TU) games to NTU-games, we also show that each NTU-bankruptcy game is compromise stable. Thus, NTU-bankruptcy games are shown to retain the two characterizing properties of TU-bankruptcy games: convexity and compromise stability. As a first example of a game theoretical NTU-bankruptcy rule, we analyze the NTU-adjusted proportional rule and show that this rule corresponds to the compromise value of NTU-bankruptcy games.