Game theoretic analysis of a bankruptcy problem from the Talmud (Q1066823)

The problem considered is how to divide an estate among creditors whose total claims exceed the value of the estate. A frequent solution in modern law is proportional division. The 2000-year old Babylonian Talmud prescribes, for three different bankruptcy problems, solutions which are not always proportional division. In the present paper a rationale for these solutions not involving game theory is given in terms of the Talmudic principle of equal division of the contested amount. This rationale leads to a unique solution for all bankruptcy problems, and it is then shown that this solution always coincides with the nucleolus when the problem is viewed as a coalitional game.