Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/222070
Authors: 
Csóka, Péter
Illés, Ferenc
Solymosi, Tamás
Year of Publication: 
2020
Series/Report no.: 
CERS-IE Working Papers No. CERS-IE WP - 2020/1
Abstract: 
In a liability problem, the asset value of an insolvent firm must be distributed among the creditors and the firm itself, when the firm has some freedom in negotiating with the creditors. We model the negotiations using cooperative game theory and analyze the Shapley value to resolve such liability problems. We establish three main monotonicity properties of the Shapley value. First, creditors can only benefit from the increase in their claims or of the asset value. Second, the firm can only benefit from the increase of a claim but can end up with more or with less if the asset value increases, depending on the configuration of small and large liabilities. Third, creditors with larger claims benefit more from the increase of the asset value. Even though liability games are constant-sum games and we show that the Shapley value can be calculated directly from a liability problem, we prove that calculating the Shapley payoff to the firm is NP-hard.
Subjects: 
Game theory
Shapley value
constant-sum game
liability game
insolvency
JEL: 
C71
C78
Document Type: 
Working Paper

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