Characterization of the Reverse Talmud bankruptcy rule by Exemption and Exclusion properties

The Reverse Talmud rule for bankruptcy problems applies the Constrained Equal Awards rule (CEA rule) for ‘large’ amounts of the estate, while it applies the Constrained Equal Losses rule (CEL rule) for ‘small’ amounts of the estate. The CEA rule, respectively CEL rule, can be axiomatized using the Exemption and Exclusion properties respectively. There is no rule that satisfies both these two properties. In this paper we axiomatize the Reverse Talmud rule by using compatible weaker versions of the Exemption and Exclusion properties.

► We weaken Exemption and Exclusion for bankruptcy rules in a compatible way. ► We show that the Reverse Talmud (RT) rule satisfies these properties. ► We provide axiomatizations of the RT rule. ► We generalize the RT-rule and its axiomatization to the Reverse TAL-family. ► We provide a comparison of the Reverse Talmud rule with the Talmud rule.