A Compromise Solution for Claims Problems

01/10/1991

A Compromise Solution for Claims Problems

Lahiri Somdeb

Working Papers

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The purpose of this paper is to axiomatically characterize a Compromise Solution for claims problems which satisfies invariance under affine utility transformations. The more well-known solutions for claims problems do not satisfy this property. This is a major deficiency of the latter class of solutions, as they fail to predict appropriate responsiveness to risk aversion by ones opponents. Our solution overcomes this deficiency.

IIMA