1

Characterizations of Proportional
Rules in Claims Problems

Hirofumi YAMAMURA
Discussion Paper No. 2006-04

April 14, 2006

2
Characterizations of Proportional
Rules in Claims Problems
*


Hirofumi YAMAMURA
+

Tokyo I nstitute of Technology

April 14, 2006

Abstract

When resources are divided among agents, resources are in many cases divided
proportionally to their claims. I n this paper, we provide new axiomatizations of
generalized proportional rules based on the axiom decentralizability due to Moulin
[13,14,15]. Decentralizability requires that no reallocation by any coalition can affect
the awards of the agents outside the coalition. Our results can explain the results of
Chun [7] and J u=Miyagawa=Sakai [10] based on non-manipulability requirements as
corollaries.
We moreover introduce a coalitional form game called a claims reallocation game
which describes a claims problem under any established division rule. We require the
core of a claims reallocation game be always nonempty for claimants to make an
agreement on how to divide. We show that under a certain condition, the core of a claims
reallocation game is always nonempty if and only if the division rule is a generalized
proportional rule.

J EL Classification: C71, D63, D70.
Key words: Bankruptcy problem; Proportional Rule; No Advantageous Reallocation;
Decentralizability; Claims Reallocation Game; Core.

*
The author thanks Professor Takehiko Yamato for his helpful comments.
+
Department of Social Engineering, Graduate School of Decision Science and Technology,
2-12-1 Oh-okayama, Meguro-ku, Tokyo, 152-8552, J apan; yamamura-h@soc. titech.ac.jp
3
1. I ntroduction

When a firm goes bankrupt, how should its liquidation value be divided among
creditors? When cooperation in a group yields a surplus, how its surplus be divided
among the members of the group? Or how should a government redistribute its citizens
incomes among them? There are many kinds of division problems that should be solved
according to a rule.
Such problems are usually solved according to each agents property, which we call
an agents claim. For example, in a bankruptcy problem, the liquidation value is
divided among creditors according to their credits. A claims problem we are going to
study in this paper is as follows. There are a set of agents and a divisible resource to be
divided among them. Each agent has a claim to this resource. A claims problem is how
this divisible resource should be divided among agents according to their claims.
We should note that claims are transferable in many cases. Then, a division rule to
solve claims problems should be established in consideration for the transferability of
claims. That is, a division rule should be made so as not to cause troubles by any
reallocation of claims. I n this paper, we study the class of division rules which are not
troubled by reallocations of claims by the following two approaches: an axiomatic
approach and a game theoretic approach.
I n axiomatic studies on claims problems, non-manipulability condition, which
demands that there be no agents who benefit by any reallocation of their claims, is the
most studied property to be satisfied in consideration for the transferability of claims.
This property is studied by ONeill [16] in bankruptcy problems and by Banker [5] in
cost allocation problems. And then, Moulin [12] defined this requirement as an axiom
called No Advantageous Reallocation (in short NAR) and Chun [7] introduced NAR in
claims problems. After them, de Frutos [8], J u [9] and J u=Miyagawa=Sakai [10] have
studied non-manipulability. (See Thomson [18] for a survey.)
A typical example of a non-manipulable division rule is the proportional rule, which is
widely used in modern laws. Chun [7] showed that the proportional rule is the only rule
satisfying NAR and supplementary axioms. J u=Miyagawa=Sakai [10] defined
generalized proportional rules and characterize them based on NAR.
J u=Miyagawa=Sakai [10] also axiomatize the proportional rule based on a weaker
version of NAR, they call pairwise reallocation proofness, which takes only pairwise
reallocations into consideration.
I n the axiomatic part of this paper, we introduce other weaker versions of NAR which
4
take only k-person reallocations into consideration and study to what extent we can
weaken axioms required to characterize generalized proportional rules. To study this
problem, we reconsider the axiom Monlin [13,14,15] defined as decentralizability and
introduce its descendent axioms. These axioms help us to order the relationships among
axioms and to study the axiomatization of generalized proportional rules. Our results
can explain the results of Chun [7] and J u=Miyagawa=Sakai [10] based on
non-manipulability requirements as corollaries.
I n the game theoretic part of this paper, we investigate a new coalitional game
theoretic approach that rationalizes generalized proportional rules. I n the previous
game theoretic approaches, like in ONeill [16] and Aumann=Maschler [3], a problem
under the nature state, where there is no rule to solve claims problems, has been
described as a coalitional form game. Game theoretic studies have provided the
rationales for several division rules as solutions of this game, such as the random
arrival rule (ONeill [16]) and the Talmudic rule (Aumann= Maschler [3]). However,
they have not given a satisfactory answer to the question why the proportional rule is
actually used. The reason why they have not rationalized the proportional rule may
have something to do with Atsumi [2]s criticism about previous game theoretic
approaches.
Atsumi [2]s criticism is summarized as follows. Game theoretic studies have
analyzed a coalitional form game where the worth of a coalition is defined as what it can
get without going to court. However, the establishment of a division rule causes a
different situation from what they have analyzed, because claimants act with this
division rule taking into consideration. So, the division rules they have conducted
through the analysis of this games may not be conclusive.
I n this paper, following Atsumi [2]s criticism, we investigate a new coalitional form
game which describes a bankruptcy problem after a rule is established as an act. We
assume claims are transferable among creditors as in modern laws. Then, each
subgroup of claimants may manipulate the sum of their awards by reallocating their
claims. So, the game we consider in this paper might be called a claims reallocation
game.
We provide the rationale for proportional division rules through the analysis of claims
reallocation games. We require that the core of a claims reallocation game be always
non-empty in order for claimants to make an agreement on how to divide the liquidation
value. We show only proportional rules satisfy this requirement under a certain
condition.
The remainder of this paper is as follows. I n section 2, we define a claims problem and
5
generalized proportional rules. I n section 3, we introduce axioms and consider the
relationships among axioms. I n section 4, we axiomatize generalized proportional rules
by axioms introduced in section 3 to consider to what extent we can weaken the axioms
required to characterize generalized proportional rules. I n section 5, we investigate a
new coalitional form game called a Claims Reallocation Game and characterize
generalized proportional rules through the analysis of Claims Reallocation Games. I n
section 6, we state some concluding remarks.

2. The Model

There is a finite set { } n N , , 2 , 1 L = of claimants. For each i N, i has a claim
( )
k
K k ik i
R c c
+ e
e where { } k K , , 2 , 1 L = , characterized by a finite dimensional vector.
A claims profile c is a list of individual claims ( )
k n
N i i
R c c

+ e
e . For each SN, let

S
c

eS i
i
c . R E e is a divisible value to be divided among N. Then, an n-person claims
problem is formalized by the pair R R E c
k n
e

+
) , ( such that
k
N
R c
+ +
e .
n
D denotes the set of feasible n-person claims problems. That is,
{ }
k
N
k n n
R c R R E c D
+ +

+
e e = | ) , ( .
Let
n n
D D _ be the domain of n-person claims problems. The domain
n
D is rich if
n
D E c e ) , ( , then for any
n
D E c e ' ' ) , ( such that
N N
c c ' = and E E ' = ,
n
D E c e ' ' ) , ( .
The richness of the domain is necessary for reallocations of claims to be taken into
consideration. I n this paper, we consider only rich domains.
Given a domain
n
D , a division rule over a domain
n
D is a function
n n n
R D f :
which associates with each problem
n
D E c e ) , ( an award profile ( )
n
N i
n
i
R E c f e
e
) , ( .
I n this paper, we focus on proportional division rules and its generalizations. Then, we
define what J u=Miyagawa=Sakai [10] calls a generalized proportional rule.

Definition 2.1. A rule
n n n
R D f : is a generalized proportional rule if there exist
mappings
n k
R R R A
+ +
: ,
k k
R R R W
+ +
: such that,
6

e
+ =
K k
N k
Nk
ik
N i
n
i
E c W
c
c
E c A E c f ) , ( ) , ( ) , ( ,
for each iN and each
n
D E c e ) , ( .

What is called the proportional rule is a special case of a generalized proportional
rule.

Example 2.2. Let k=1. A rule
n n n
R D f : is the proportional rule if it is a
generalized proportional rule which satisfies N i E c A
N i
e = , 0 ) , ( and E E c W
N
= ) , ( .

On the other hand, the egalitarian rule is one of a generalized proportional rule.

Example 2.3. Let k=1. Define the egalitarian rule
n n n
R D f : such that
E
n
E c f
n
i
1
) , ( = , for each iN and each
n
D E c e ) , ( .
The egalitarian rule is one of a generalized proportional rule such that E E c W
N
= ) , (
and N i
n
E
E c A
N i
e = , ) , ( .

3. Axioms

I n this chapter, we define a number of axioms which a rule
n
f should satisfy. First
of all, we introduce one of our main axioms, which is interpreted as a condition for
non-manipulability, called no advantageous reallocation.

No Advantageous Reallocation (NAR)
1
. For any ) , ( E c ,
n
D E c e ' ' ) , ( , if E=E and there
exists N S _ such that
S S
c c ' = and S N j c c
j j
\ , e ' = , then

e e
' ' =
S i S i
n
i
n
i
E c f E c f ) , ( ) , ( . I n other words, for any N S _ ,

e

S i
n
i
f ) ( is
dependent only on
N
c , E, and ( )
S N j
j
c
/ e
.


1
J u=Miyagawa=Sakai[10] calls this axiom Reallocation Proofness.
7
This axiom NAR is introduced by Moulin [12] in quasi-linear bargaining problems. I n
the context of claims problem, Chun [7] introduced NAR. NAR requires that no coalition
can benefit by reallocating their claims. Since claims are in principle transferable in
modern law, we should regard NAR as a necessary axiom to avoid manipulation.
NAR deals with any feasible coalition. Then a way to weaken NAR is to deal only with
particular coalitions. Actually, J u=Miyagawa=Sakai [10] introduced an axiom which
takes only two parsons coalitions into consideration
2
. I n this paper, we consider more
generally weaker versions of NAR which take only k-person coalitions into
consideration.

No Advantageous Reallocation for k-person Coalitions (NAR-k). For any ) , ( E c ,
n
D E c e ' ' ) , ( , if E=E and there exists N S _ , | S| =k such that
S S
c c ' = and
j j
c c ' = ,
S N j \ e , then

e e
' ' =
S i S i
n
i
n
i
E c f E c f ) , ( ) , ( . I n other words, for any N S _ ,
| S| =k,

e

S i
n
i
f ) ( is dependent only on
N
c , E, and ( )
S N j
j
c
/ e
.

Next, we introduce another one of our main axiom Moulin [13,14,15] defined as
Decentralizability.

Decentralizability (DEC). For any ) , ( E c ,
n
D E c e ' ' ) , ( , if
N N
c c ' = , E=E and
i i
c c ' = ,
then ) , ( ) , ( E c f E c f
n
i
n
i
' ' = . I n other words, for any N i e , ) (
n
i
f is dependent only on
N
c , E, and
i
c .

There are some reasons we consider DEC again, which seems similar with NAR. First,
we have to note that DEC itself has a property a rule
n
f should satisfy. Referred by
Moulin[15], only
N
c , E and
i
c are required to compute is award. Therefore, we can
interpret DEC as a requirement to simplify calculating each agents award.
Moreover, when we consider the relationship between NAR and DEC, we notice that
DEC contrasts strikingly with NAR. NAR demands that no reallocation by any coalition
can benefit the members of this coalition. On the other hand, DEC demands that no

2
J u=Miyagawa=Sakai[10] calls this axiom Pairwise Reallocation Proofness, which is
equivalent to NAR-2 defined as follows.
8
reallocation by any coalition can affect the awards of agents outside this coalition. I t is
mainly because no coalitional reallocation can damage agents outside this coalition why
we require NAE. Therefore, we can regard DEC as a more essential axiom.
However, these are not all of reasons why we reintroduce DEC. We reconsider DEC
because DEC and its descendant axioms help us to order the relationships among
axioms. Moreover, DEC and its descendant axioms are useful to study the possibility (or
impossibility) of the axiomatizations of generalized proportional rules. To study these
problems, the following axiom, we call constantness, is a key axiom.

Constantness (CON). For any
n
D E c E c e ' ' ) , ( ), , ( , if
N N
c c ' = and E E ' = , then

e e
' ' =
N i
n
i
N i
n
i
E c f E c f ) , ( ) , ( . I n other words,

e

N i
n
i
f ) ( is dependent only on
N
c
and E.

The axiom Pareto Optimality, which is usually requested, is a special case of
constantness.

Pareto Optimality (PO). For any
n
D E c e ) , ( , E E c f
N i
n
i
=

e
) , ( .

The axiom PO is usually considered to be satisfied, but PO may not be satisfied when
it costs agents to solve claims problems. For example, mediation fees or trial costs are
required. Then, we can justify CON as Moulin [15] justifies DEC. By CON, only
N
c
and E are required to compute the sum of awards to all agents. So, CON can make the
computation more simple, which may make a cost to solve problems cheaper.
Next, we consider descendant axioms of DEC. One way to introduce descendant
axioms of DEC is to introduce coalitional versions of DEC, which deal only with
particular coalitions, as we introduce descendant axioms of NAR. To introduce
coalitional decentralizability, we can consider the following two axioms.

Decentralizability for k-person coalitions (DEC-k). For any N S _ , | S| =k, and ) , ( E c ,
n
D E c e ' ' ) , ( , if
N N
c c ' = , E=E and
i i
c c ' = , S i e , then

e e
' ' =
S i
n
i
S i
n
i
E c f E c f ) , ( ) , ( .
I n other words, for any N S _ , | S| =k,

e

S i
n
i
f ) ( is dependent only on
N
c , E, and
9
( )
S i i
c
e
.

Strong Decentralizability for k-person coalitions (SDEC-k). For any N S _ , | S| =k,
and ) , ( E c ,
n
D E c e ' ' ) , ( if
N N
c c ' = , E=E, and
S S
c c ' = , then

e e
' ' =
S i
n
i
S i
n
i
E c f E c f ) , ( ) , ( . I n other words, for any N S _ , | S| =k,

e

S i
n
i
f ) ( is
dependent only on
N
c , E, and
S
c .

DEC-k requires that for any k-person coalition the sum of their awards be never
affected by reallocation by agents outside this coalition. I f they make a coalition, their
awards are dependent of any reallocation outside them. SDEC-k additionally requests
that any reallocation among any k-person coalition can benefit the members of this
coalition.
Another way to introduce a descendant axiom of DEC is to deal only with agents with
a particular property. I n this paper, we consider a weaker version of DEC, which deals
only nulls, those whose claims are zero.

Decentralizability for Nulls (DECN). For any ) , ( E c and
n
D E c e ' ' ) , ( , if
N N
c c ' = ,
E=E, and 0 = ' =
i i
c c , then ) , ( ) , ( E c f E c f
n
i
n
i
' ' = . I n other words, for any N i e ,
) (
n
i
f is dependent only on
N
c , E if 0 =
i
c .

The axiom No Awards for Nulls, which is usually considered, is a special case of
DENC.

No Awards for Nulls (NAN). For any ) , ( E c
n
D e , if 0 =
i
c , then 0 ) , ( = E c f
n
i
.

To solve a huge bankruptcy problem, taxes are sometimes used. Then, those who have
no claims must accept negative awards through taxes to them. Or, in the context of
income redistribution problems, citizens are usually assured of a living standard with a
certain level, regardless of their incomes. Then, even if a citizens income is zero, he
must redistribute a positive award. These examples are showing that a null agent may
10
not get a zero award in a certain rule. This axiom DECN requires that awards for nulls
be dependent only on
N
c and E even if No Award for Null is not satisfied.
These are all descendant axioms of NAR and DEC we study as follows. Next, we study
the relationships among these axioms. First of all, we consider the relationship between
NAR and DEC. The following claim 3.1. and example 3.2. show that DEC is strictly
weaker than NAR. That is, NAR implies DEC but DEC does not always imply NAR.

Claim 3.1. NAR implies CON and DEC.

Proof. First, we are going to proof NAR implies CON. For any ) , ( E c ,
n
D E c e ' ' ) , ( , if
N N
c c ' = and E=E, then by NAR,

e e
' ' =
N i
n
i
N i
n
i
E c f E c f ) , ( ) , ( .
So,
n
f satisfies CON. Second let us proof NAR implies DEC. For any ) , ( E c ,
n
D E c e ' ' ) , ( , if
N N
c c ' = , E=E,
i i
c c ' = and, then
{ } { }
) , ( ) , ( ) , ( ) , ( ) , ( ) , (
\ \
E c f E c f E c f E c f E c f E c f
j
i N j
n
j
N j
n
j
i N j
n
j
N j
n
j
n
i
' ' = ' ' ' ' = =

e e e e
by NAR. So, for any N i e , ) (
n
i
f is dependent only on C, E, and
i
c .

Example 3.2. Let k=1 and consider a rule
n
f such that N i E
c
c
E c f
N
i n
i
e
|
|
.
|

\
|
= , ) , (
2

satisfies DEC, but this solution does not satisfy NAR.

However, assuming constrantness, we can easily show that NAR becomes equivalent
to DEC
3
. This fact also indicates that constantness has an important role to associate
NAR with DEC.

Claim 3.3. Assume CON. Then, DEC is equivalent to NAR.

Proof. By claim 3.1, it is sufficient to prove that NAR implies DEC under CON. For any
) , ( E c ,
n
D E c e ' ' ) , ( , if
N N
c c ' = , E=E and there exists N S _ such that
S S
c c ' = and

3
Moulin [13] shows this fact under PO.
11
j j
c c ' = , S N j / e , then

e e
' ' =
N i N i
n
i
n
i
E c f E c f ) , ( ) , ( by DEC and
) , ( ) , ( E c f E c f
n
i
n
i
' ' = , S N j / e by DEC. Therefore,

e e e
=
S i S N j
n
j
N i
n
i
n
i
E c f E c f E c f
\
) , ( ) , ( ) , (

e e e
' ' = ' ' ' ' =
N i S i
n
i
S N j
n
j
n
i
E c f E c f E c f ) , ( ) , ( ) , (
/


Next we consider the relationships among descendant axioms of DEC and NAR. The
following claim3.4, 3.5, and 3.6 shows the relationships.

Claim 3,4. For k<k<n, DEC-k implies DEC-k.

Proof. I t is sufficient to prove that for any k, DEC-k implies DEC-(k+1). Consider
1 , + = _ k S N S , then we can express

e

S i
n
i
f ) ( by
{ }

e e

S i i S j
n
j
f
S
/
) (
1
1
. For any S i e ,
{ }

e

i S j
n
j
f
\
) ( is dependent only on
N
c , E, and { }
{ } i S j
j
c
\ e
by DEC-k, because {} k i S = / .
Therefore, =

eS i
n
i
f ) (
{ }

e e

S i i S j
n
j
f
S
/
) (
1
1
is dependent only on
N
c , E and { }
S i i
c
e
.

Claim 3.5. Assume CON, then DEC-k is equivalent to NAR-(n-k).

Proof. First, we are going to proof DEC-k implies NAR-(n-k). For any ) , ( E c ,
n
D E c e ' ' ) , ( , if E=E and there exists N S _ , | S| =n-k such that
S S
c c ' = and
S N j c c
j j
\ , e ' = , then by CON and DCE-k,

e e e e e e
' ' = ' ' ' ' = =
S i
n
i
S N i
n
i
N i
n
i
S N i
n
i
N i
n
i
S i
n
i
E c f E c f E c f E c f E c f E c f ) , ( ) , ( ) , ( ) , ( ) , ( ) , (
/ /
,
since | N/S| =k. So, f satisfies NAR-(n-k).
Second, let us proof NAR-(n-k) implies DEC-k. For any ) , ( E c ,
n
D E c e ' ' ) , ( , if E=E,
N N
c c ' = , and there exists N S _ , | S| =k such that S i c c
i i
e ' = , , then by CON and
NAR-(n-k),
12

e e e e e e
' ' = ' ' ' ' = =
S i
n
i
S N i
n
i
N i
n
i
S N i
n
i
N i
n
i
S i
n
i
E c f E c f E c f E c f E c f E c f ) , ( ) , ( ) , ( ) , ( ) , ( ) , (
/ /

since | N/S| =n-k. So,
n
f satisfies DEC-k.

Claim 3.6. Assume CON, then for k<k<n, NAR-k implies NAR-k.
Proof. Since CON is assumed,
n
f satisfies DEC-(n-k) by claim 3.5. Then,
n
f
satisfies DEC-(n-k) by claim 3.4. Therefore, f satisfies NAR-k by claim 3.5.

The relationships among axioms are summerized by the following figure 3.7.

I n the last of this section, we introduce an axiom related to the range of the image of
n
f J u=Miyagawa=Sakai [10] introduced.

One-Sided Boundedness(OB). For any
+ +
eR E c, , there exists N i e such that ) (
n
i
f
is bounded from either above or below over a non empty and open subset of
{ } E E c c D E c E c D
N
n n
= = e = , | ) , ( ) , ( .

Since ) , ( E c D
n
is compact, we can replace OB by continuity or boundedness of
n
f .
Needless to say, OB is weaker than continuity or boundedness of
n
f .

13
4. Main Results

I n this chapter, we characterize generalized proportional rules based on DEC or NAR
or their descendent axioms.

Theorem 4.1. Let n 3. A rule satisfies DEC, CON and OB if and only if it is a
generalized proportional rule.

Proof. I t is clear that a generalized proportional rule satisfies DEC, CON and OB. Then,
we prove the converse. Let
n
f be a rule satisfying DEC, CON and OB, then define a
mapping
n k
R R R A
+ +
: and
n k n n
R R R W

+
: such that,
) 0 , , ( ) , ( E c f E c A
N
n
N
, ) , ( ) 0 , , ( ) , ( E c A E c f E c W
N N
n n
.
By DEC of
n
f , A is well defined, and by DEC and CON, OB of
n
f ,
n
W also
satisfies DEC, CON and OB. Then we replace ) , ( E c W
n
i
by ) , , (
i N
n
i
c E c W for each i
N.

Step 1. I f
n
f satisfies DEC and CON, then
n
W is symmetric. That is, for any
n
D E c e ) , ( , if
j i
c c = , then ) , , ( ) , , (
j N
n
j i N
n
i
c E c W c E c W = .
Proof of Step 1. Take any { } j i N k , \ e , and consider ) , ( E c ' ' , ) , ( E c ' ' ' '
n
D e such that
E E E = ' ' = ' , c c c
j i
= ' ' = ' , c c c c
N k k
= ' ' = ' , { } i k N h c
h
, \ , 0 e = ' , and 0 = ' '
h
c ,
{ } j k N h , \ e . Since ) (
n
W satisfies DEC and CON, and 0 ) 0 , , ( = E c W
N
n
i
, iN,
) , , ( ) , , ( ) , , ( ) , , (
h N
n
h
N i
i N
n
i i N N
n
i i N
n
i
c E c W c E c W c E c W c E c W ' ' = ' ' ' =

e

) , , ( ) , , ( ) , , ( ) , , (
j N
n
j j N
n
j h N
n
h
N i
i N
n
i
c E c W c E c W c E c W c E c W = ' ' = ' ' ' ' =

e


Step 2. I f
n
f satisfies DEC and CON, for each N i e ) , , ( E c W
N
n
i
is additive with
14
regard to
i
c . That is, if
i i i
c c c ' ' = ' + , then
) , , ( ) , , ( ) , , (
i N
n
i i N
n
i i N
n
i
c E c W c E c W c E c W ' ' = ' + .
Proof of Step 2. Take any {} i N k j \ , e and consider ) , ( E c and
n
D E c e ' ' ) , ( such
that
{ }

\
|
e =
' + = ' =
= ' ' =
' + = ' =
' =
. , , / , 0
) (
0 ,
,
k j i N h c
c c c c c
c c c
c c c c c
E E
h
N k k
j j
i i

Then, ) , ( ) , ( ) , , ( ) , , ( E c W E c W c E c W c E c W
n
j
n
i N
n
j N
n
i
+ = ' +
)) ( , , ( ) , ( c c c E c W E c W
N N
n
k
N i
n
i
' + =

e
) , , ( ) , ( c c E c W E c W
N
n
i
n
i
' + = ' ' = .
Since
n
W is symmetric by step 1, ) , , ( ) , , ( c E c W c E c W
N i N j
' = ' . Therefore,
) , , ( ) , , ( ) , , ( c c E c W c E c W c E c W
N
n
i N
n
i N
n
i
' + = ' + .

For each kK, let us define a mapping R R R R W
k n
k

+ + +
: such that,
( )) 0 , , 0 , , 0 , , 0 , , ( ) , , (
1
L L
k N
n
k N
n
k
c E c W c E c W .
Then, by step 2,

e
=
K k
k N
n
k N
n
c E c W c E c W ) , , ( ) , , (
1 1 1
.
and for any { } 1 / N i e , by step 1,

e
= =
K k
ik N
n
k i N
n
i N
n
i
c E c W c E c W c E c W ) , , ( ) , , ( ) , , (
1
.
Then, for each kK, let us define a mapping R R R E c W
k
N
n
k

+ +
: ) , ( such that,
) , , ( ) , (
Nk N
n
k N
n
k
c E c W E c W .
Since, for each kK , ) , , ( E c W
N
n
k
is additive with regards to
k
c and satisfies OB,
15
then
) , ( ) , , ( E c W
c
c
c E c W
N k
Nk
ik
ik N
n
k
=
by J ensens equation
4
(See Aczel=Dhombres [1].) Therefore, only generalized
proportional rules satisfy DEC, CON and OB.

We moreover investigate the axiomatizations of generalized proportional rules based
on weaker versions of NAR or DEC. The following theorem shows to what extent axioms
required to characterize generalized proportional can be weaken without any other
constraints. To proof this theorem, the idea of coalitional decentralizability is useful.

Theorem 4.2. Let 2kn-3. A rule satisfies DEC-k ( or NAR-(n-k) ), CON and OB if and
only if it is a generalized proportional rule.

Proof. We show
n
f satisfies DEC if
n
f satisfies DEC-k, 2kn-3. Then, by theorem
4.1,
n
f must be a generalized proportional rule.
For
n
D E c e ) , ( , consider a problem
n
D E c e ' ' ) , ( such that E=E,
1 1
c c = ' , 0
2
= ' c ,
3 2 3
c c c + = ' , ) , , 4 ( , n i c c
i i
L e = ' . Assuming DEC-(n-k), 3k n-1,
n
f must
satisfy DEC-(n-3) and DEC-(n-2) by Claim 3.4. Since, { } 2 3 , 2 \ = n N and
{ } 3 3 , 2 , 1 \ = n N , then by DCE-(n-3) ,DEC-(n-2),
{ } { } { } { }
). , ( ) , ( ) , ( ) , ( ) , ( ) , (
1
3 , 2 , 1 \
1
3 , 2 \ 3 , 2 , 1 \ 3 , 2 \
1
E c f E c f E c f E c f E c f E c f
n
N i
n
N i
n
i
N i
n
i
N i
n
i
n
' ' = ' ' ' ' = =

e e e e
Taking the similar steps, for
n
D E c e ' ' ' ' ) , ( such that E=E,
1 1
c c = ' ' , 0 = ' '
i
c ,
) 1 , , 2 ( e n i L and
1
c c c
N n
= ' ' , we can say ) , ( ) , (
1 1
E c f E c f
n n
' ' ' ' = . Therefore, for
any ) , ( E c ,
n
D E c e ' ' ) , ( , if
N N
c c ' = , E=E and
1 1
c c ' = , then ) , ( ) , (
1 1
E c f E c f
n n
' ' = .
For any iN, 1 = i , we can similarly show ) (
n
i
f is dependent only on
N
c and E and
i
c .


4
Let X be an interval of R which contains 0 and consider a mapping R X f : which
satisfies for any x,yX, if x+yX then f(x)+f(y)=f(x+y) and one sided boundedness.
Then, there exists cR such that f(x)=cx, for any xX.
16
However, we cannot characterize generalized proportional rule by NAR-2 (or DEC-
(n-2) ) only. The following example shows a rule which satisfies NAR-2 (or DEC-(n-2) ),
CON and OB but is not a generalized proportional rule.

Example 4.3. Let k=1 and n4. Consider a rule
n
f such that
N i each for E
c
c c c
E c f
N
i i i n
i
e
+
=
+
,
3
) , (
1 1
,
where n+1=1. This rule
n
f satisfies CON and NAR-2 ( or DEC-(n-2) ), because
E E
c
c
E c f
N
N i
i
N i
n
i
=

=

e
e
) 1 1 3 (
) , ( and
E
c
c c c
E
c
c c c c
E c f E c f
N
j i
j i N k
k
N
j j i i n
j
n
i
1 1
) . ( \ 1 1
2
) ( 2
) , ( ) , (
+
e +

=
+ +
= +

, if j=i+1,
E
c
c c c c c c
E c f E c f
N
j j j i i i n
j
n
i
1 1 1 1
3 3
) , ( ) , (
+ +
+ +
= +
{ }
E
c
c c c c c
N
j i N k
k j j i i
e
+ +
+
=
, \
1 1 1 1
3
, otherwise.
Needless to say,
n
f satisfies OB. However, this rule
n
f is not a generalized
proportional rule.

I n order to axiomatize generalized proportional rules based on NAR-2 (or DEC-(n-2) ),
an additional axiom is required. The following theorem 4.4. is an axiomatization of
generalized proportional rules based on NAR-2 (or DEC-(n-2) ) with an additional axiom
DECN.

Theorem 4.4. Let n3. A rule satisfies DEC-(n-2) ( or NAR-2 ), DECN, CON and OB if
and only if it is a generalized proportional rule.
5


Proof. For SN, define { } S N j c D E c S D
j
n n
/ , 0 | ) , ( ) ( e = e = and a mapping
) , ( E c A
N
as in theorem 4.1. By DECN, ) , ( E c A
N
is well-defined.


5
This theorem is a generalized rule version of J u=Miyagawa=Sakai [10 Theorem 4].
17
Step 1. For any SN, | S| =3, there exists a mapping
k k n
S
R R R W
+ +
: such that,

e
+ =
K k
N k
n
S
Nk
ik
N i
n
i
E c W
c
c
E c A E c f ) , ( ) , ( ) , ( , for each iN and each ) ( ) , ( S D E c
n
e .
Proof of Step 1. We can prove this lemma similarly with the proof of Theorem 4.1.

Step 2. For any S,TN, such that | S| =| T| =3,
n
T
n
S
W W = .
Proof of Step 2. When 2 > T S , take any kK, i,jST, ij, and
n
D E c e ) , ( such
that ) 0 , , , 0 ( L L
Nk i
c c = ,
i N j
c c c = and 0 =
k
c , k N/ i,j . Since
) ( ) , ( S D E c
n
e and ) ( ) , ( T D E c
n
e ,
) , ( ) , ( ) , ( ) , ( E c W E c W E c A E c f
N k
n
T N k
n
S N i
n
i
= = .
Therefore,
n
T
n
S
W W = .
When 2 < T S , we can take S,TN, | S| =| T| =3, such that = ' S S = ' ' T S
2 = ' T T . So,
n
T
m
T
n
S
n
S
W W W W = = =
' '
.

Step 3. I f for any
U
m S S
n
S D E c
=
e
:
) ( ) , (

e
+ =
K k
N k
Nk
ik
N i
n
i
E c W
c
c
E c A E c f ) , ( ) , ( ) , ( , then
for any
U
1 :
) ( ) , (
+ =
e
m S S
n
S D E c

e
+ =
K k
N k
Nk
ik
N i
n
i
E c W
c
c
E c A E c f ) , ( ) , ( ) , ( .
Proof of step 3. Let (c,E) ) (S D
n
e , | S| =k+1, then for any jN, ) , ( ) , ( E c A E c f
N j
n
j
= ,
and for any i,iS,

e
'
' '
+
+ + = +
K k
N k
Nk
k i ik
i i
n
i
n
i
E c W
c
c c
A A E c f E c f ) , ( ) , ( ) , ( by NAR-2.
By these equations, we can show

e
+ =
K k
N k
Nk
ik
i
n
i
E c W
c
c
A E c f ) , ( ) , ( for any iS.

By step 2 and step 3, for any (c,E) ) (N D D
n n
= e ,
18

e
+ =
K k
N k
Nk
ik
i
n
i
E c W
c
c
A E c f ) , ( ) , ( for each i N which accords with a generalized
proportional rule.

Next, we axiomatize generalized proportional rules based on stronger versions of
coalitional decentralizability. Based on SDEC, we can axiomatize generalized
proportional rules without constantness.

Theorem 4.5.
(1) Let n5. A rule satisfies SDEC-2 and OB if and only if it is a generalized
proportional rule.
(2) Let n5 and n-2k3. A rule satisfies SDEC-k and OB if and only if it is a
generalized proportional rule.

Proof. We prove
n
f satisfies CON and DEC-k (kn-3) under the condition (1) or (2).
Then,
n
f must be a generalized proportional rule by theorem 4.2.

Step 1. Let k2 and nk+2. I f
n
f satisfies SDCE-k, then
n
f satisfies CON.
Proof of Step 1. For
n
D E c e ) , ( , consider a problem
n
D E c e ' ' ) , ( such that E=E,
0
1
= ' c ,
2 1 2
c c c + = ' , { } 2 , 1 \ , N i c c
i i
e = ' . Then, by SDEC-k,
{ } { }

=
=
_ e
=
_ e =
' ' = ' '

=
n
i
n
i
k S
n S S i
n
i
k n
k S
n S S i
n
i
k n
n
i
n
i
E c f E c f
k
n
C
E c f
k
n
C
E c f
3 , , 3 2 , , 3 2 3
) , ( ) , (
2 1
) , (
2 1
) , (
L L
and,
{ } { }
{ }
|
|
|
.
|

\
|

= c
= +

=
=
_ e
n
i
n
i
k S
S k n S i
n
i
n n
E c f
k
n
C
E c f
k S S N S
E c f E c f
3 2 , 1 2 2
2 1
) , (
2
2 1
) , (
, 2 , 1 |
1
) , ( ) , (
{ } { }
{ }
). , ( ) ( ) , (
2
2 1
) , (
, 2 , 1 |
1
2 1
3 2 , 1 2 2
E c f E c f E c f
k
n
C
E c f
k S S N S
n n
n
i
n
i
k S
S k n S i
n
i
' ' + ' ' =
|
|
|
.
|

\
|
' '

' '
= c
=

=
=
_ e
Hence,

= =
' ' =
n
i
n
i
n
i
n
i
E c f E c f
1 1
) , ( ) , ( . Taking the same steps, for
n
D E c e ' ' ' ' ) , ( , such that
E=E, ) 1 , , 1 ( , 0 e = ' ' n i c
i
L and
N n
c c = ' ' , we can show

= =
' ' ' ' =
n
i
n
i
n
i
n
i
E c f E c f
1 1
) , ( ) , ( .
19
Therefore,
n
f must satisfy CON.

Hence, in the case of (1),
n
f satisfies CON and DEC-k. Therefore,
n
f must be a
generalized proportional rule by theorem4.2.

Step 2. Let n5 and k=n-2. I f
n
f satisfies SDCE-k, then
n
f satisfies SDEC-2.
Proof of Step 2. For
n
D E c e ) , ( , consider a problem
n
D E c e ' ' ) , ( such that E=E,
0
1
= ' c ,
2 1 2
c c c + = ' , { } 1 , , 3 , 0 e = ' n i c
i
L and ) (
2 1
c c c c
N n
+ = ' . Since
n
f
satisfies SDEC-k and CON by step 1,
). , ( ) , ( ) , ( ) , ( ) , ( ) , ( ) , ( ) , (
2 1
3 1 3 1
2 1
E c f E c f E c f E c f E c f E c f E c f E c f
n n
n
i
n
i
n
i
n
i
n
i
n
i
n
i
n
i
n n
' ' + ' ' = ' ' ' ' = = +

= = = =
Hence, ) ( ) (
2 1
+
n n
f f is dependent only on
N
c , E and ) (
2 1
c c + . For any N j i e , ,

j i = , we can similarly show ) ( ) ( +
n
j
n
i
f f is dependent only on
N
c , E and ) (
j i
c c + .


By step 1 and step 2,
n
f satisfies CON and DEC-2 in the case of (2). Therefore,
n
f
must be a generalized proportional rule by theorem4.2.

By, theorem 4.5, we have proved that generalized proportional rules can be
characterized based on SDEC-k if kn-2 with an exception of 4-person problems. I n the
last of this section, we show an example of a rule of 4-person claims problems that
satisfies SDEC-2 and OB but is not a generalized proportional rule.

Example 4.6. Let k=1 and n=4. Let
i
p
N
i
c
c
for each iN. Consider a rule
n
f such
that,
E
p p p p p p
E c f
n
2
1 ) ( ) ( ) (
) , (
2
4 1
2
3 1
2
2 1
1
+ + + + +
= ,
E
p p p p p p
E c f
n
2
1 ) ( ) ( ) (
) , (
2
4 1
2
3 1
2
2 1
2
+ + + +
= ,
E
p p p p p p
E c f
n
2
1 ) ( ) ( ) (
) , (
2
4 1
2
3 1
2
2 1
3
+ + + + +
= , and
20
E
p p p p p p
E c f
n
2
1 ) ( ) ( ) (
) , (
2
4 1
2
3 1
2
2 1
4
+ + + + +
= .
This rule
n
f satisfies SDEC-2 and OB, but is not a generalized proportional rule.

5. Game Theoretic Analysis

I n this section, we introduce a new coalitional form game which describes a
bankruptcy problem after a division is established as a law. Before defining it, we
review the previous coalitional game theoretic analyses of bankruptcy problems. Given
an n-person bankruptcy problem (c,E), ONeill [16] defined a coalitional form game
) , (
) , ( E c
v N as a bankruptcy game corresponding to a problem (c,E)
6
such that,
( ) 0 , max ) (
/ ) , ( S N E c
c E S v = , for each | = _ S N S , .
Aumann=Maschler [3] explain this characteristic function ) (
) , (
S v
E c
indicates what
S can get without going to court. I n the nature state where there is no rule to solve
claims problems, it is natural for the members of S to evaluate the worth of S by what S
can get without going to court. So, this game ) , (
) , ( E c
v N might be called a bankruptcy
game under the nature state.
However, once a rule is established as an act, the members of S will evaluate the worth
of S by what S can get by going to court, as is mentioned by Atsumi [2]. So, we should
redefine the worth of S after a rule
n
f is established as a law. I n modern laws, claims
are in principle transferable among agents. Then, the members of each coalition may
manipulate the sum of their awards by reallocating their claims. Since we should take
such manipulations into consideration, we call a coalitional form game, which describes
a bankruptcy problem under an established rule, a claims reallocation game.
Applying Aumann=Peleg [3]s idea of coalitional form representation of strategic
games, we evaluate the worth of S by the following two ways.

6
ONeill [16] considered only bankruptcy problems. A bankruptcy problem is defined by
the pair
+ +
e R R E c
n
) , ( such that E c
N
> and 0 >
N
c . Let
n
B denote the set of
n-person bankruptcy problems, then
n
B { } 0 | ) , ( > > e
+ + N N
n
c and E c R R E c ,
which has a rich domain.

21
One way is to evaluate the worth of S by the assurable level. Given a rule
n
f and a
problem (c,E), an aggregated award R x
S
e is assurable for S , if
( ) ( )

e
e
e e e
s = = -
S i
S N j
j S i i
n
i S S N S N S N j j S S S i i
E c c f x c c c c c c ) , , ( , , ) ( , , ) (
/
/ / /
.
Clearlywhen
( ) { } ( ) { }
( ) ( ) ( )

e
e
e
= =
e e
s
S i
S N j
j S i i
n
i
c c c c c c
S
E c c f x
S N S N
S N j
j S S S i i
, , min max
) / (
| |
/ /
/
,
S
x is assurable for S. Then, we define an assurable (or ) representation of a claims
reallocation game as follows.

Definiton 5.1. ( )
n
f
E c
v N
) , (
, is an assurable (or ) representation of a claims reallocation
game corresponding to a problems (c,E) under a rule
n
f , if
( ) { } ( ) { }
( ) ( ) ( )

e
e
e
= =
e e
=
S i
S N j
j S i i
n
i
c c c c c c
f
E c
E c c f S v
S N S N
S N j
j S S S i i
n
, , min max ) (
) / (
| |
) , (
/ /
/
, for each | = _ S N S , .

Another way is to evaluate the worth of S by the unpreventable level. Given a rule
n
f and a problem (c,E), an aggregated award R x
S
e is unpreventable for S , if
( ) ( ) ( )

e
e
e e e
s = - =
S i
S N j
j S i i
n
i S S S S i i S N S N S N j j
E c c f x c c c c c c ) , , ( , , , , ) (
/
/ / /
.
Clearlywhen
( ) { } ( ) { }
( ) ( ) ( )

e
e
e
= =
e e
s
S i
S N j
j S i i
n
i
c c c c c c
S
E c c f x
S S S i i S N S N
S N j
j
, , max min
) / (
| |
/ /
/
,
S
x is unpreventable for S. Then, we define an unpreventable (or ) representation of
a claims reallocation game as follows.

Definiton 5.2. ( )
n
f
E c
v N
) , (
, is an unpreventable (or ) representation of a claims
reallocation game corresponding to a problems (c,E) under a rule
n
f , if
( ) { } ( ) { }
( ) ( ) ( )

e
e
e
= =
e e
=
S i
S N j
j S i i
n
i
c c c c c c
f
E c
E c c f S v
S S S i i S N S N
S N j
j
n
, , max min ) (
) / (
| |
) , (
/ /
/
, for each | = _ S N S , .

I t is clear that ) ( ) (
) , ( ) , (
S v S v
n n
f
E c
f
E c
s . This fact indicates that claims reallocation
games are based on the more pessimistic evaluation of the worth of each coalition than
22
claims reallocation games.
We should note that claims reallocation games are always superadditive but that
additional assumptions are required for claims reallocation games to satisfy
superadditivity.

Claim 5,3. For any
n
D E c e ) , ( and
n
f , ( )
n
f
E c
v N
) , (
, is superadditive.
Proof of Claim 5.3. For each , , , | = c T S N T S take
S i i
c
e
-
) ( and
T i i
c
e
-
) ( such that
( ) { } ( ) { }
( ) ( ) ( )

e
e
e
= =
e
-
e e
e
S i
S N i
j S i i
n
i
c c c c c c
S i i
E c c f Arg c
S N S N
S N j
j S S S i i
, , min max ) (
) / (
| |
/ /
/

( ) { } ( ) { }
( ) ( ) ( )

e
e
e
= =
e
-
e e
e
T i
S N i
j T i i
n
i
c c c c c c
T i i
E c c f Arg c
T N T N
T N j
j T T T i i
, , min max ) (
) / (
| |
/ /
/
.
Then, for each ( )
T S N T S N
T S N j
j
c c c

e
=
/ /
\
, ,
( ) { }
( ) ( ) ( ) ( ) ( ) ( ) ( )

e
e
e
-
e
-
e
e
e
-
=
s
e S i
T S N j
j T i i S i i
n
i
S i
S N j
j S i i
n
i
c c c
E c c c f E c c f
S N S N
S N j
j
, , , , , min
/ ) / (
|
/ /
/

( ) { }
( ) ( ) ( ) ( ) ( ) ( ) ( )

e
e
e
-
e
-
e
e
e
-
=
s
e T i
T S N j
j T i i S i i
n
i
T i
T N i
j T i i
n
i
c c c
E c c c f E c c f
S N S N
S N j
j
, , , , , min
/ ) / (
|
/ /
/
.
Therefore,
{ }
( ) ( ) ( ) ) ( , , min ) ( ) (
) , (
/
| ) (
) , ( ) , (
/ / /
T S v E c c f T v S v
n
T S N T S N T S N j j
n n
f
E c
T S i
T S N j
j T S i i
n
i
c c c
f
E c
f
E c
s s +

e
e
e
-
=
e
,
by definition of
n
f
E c
v
) , (
.

Claim 5.4. ( )
n
f
E c
v N
) , (
, is superadditive if
(1) for any iN,
n
i
f is concave on c.
(2) for any SN,

eS i
n
i
f is quasi-concave on
S
c and for any iN
n
i
f is continuous on c.
Proof of Claim 5.4. For each , , , | = c T S N T S take
T S N j j
c
e
-
/
) ( such that
( ) { } ( ) { }
( ) ( ) ( )

e
e
e
= =
e
-
e
e
e
T S i
T S N i
j T S i i
n
i
c c c c c c
T S N j j
E c c f Arg c
T S T S T S i i T S N T S N
T S N j
j
, , max min ) (
) / (
| |
/
/ /
/

And define correspondences ( ) { } ( ) { }
S S S i i T T T i i S
c c c c c c = = u
e e
| | : and
23
( ) { } ( ) { }
T T T i i S S S i i T
c c c c c c = = u
e e
| | : such that,
( )
( ) { }
( ) ( ) ( )

e
e
-
e e
=
e
e
= u
S i
T S N j
j T i i S i i
n
i
c c c
T i i S
E c c c f Arg c
S S S i i
) , , ( max ) (
/
|
and
( )
( ) { }
( ) ( ) ( )

e
e
-
e e
=
e
e
= u
T i
T S N j
j T i i S i i
n
i
c c c
S i i T
E c c c f Arg c
T T T i i
) , , ( max ) (
/
|
.
I n both case (1) and case (2), ) ( u
S
and ) ( u
T
are non-empty, convex, and upper
hemi-continuous. ( ) { }
S S S i i
c c c =
e
| and ( ) { }
T T T i i
c c c =
e
| are compact. Then, by
Kakutanis fixed point theorem (Kakutani [11]), there must exist
S i i
c
e
-
) ( and
T i i
c
e
-
) (
such that ( ) ) ( ) (
T i i S S i i
c c
e
-
e
-
u e and ( ) ) ( ) (
S i i T T i i
c c
e
-
e
-
u e . Therefore,
{ }
( ) ( ) ( )
{ }
( ) ( ) ( )

e
e
-
e
=
e
e
-
e
=
e e
+ s +
T i
T N j
j T i i
n
i
c c c
S i
S N j
j S i i
n
i
c c c
f
E c
f
E c
E c c f E c c f T v S v
T T T i i S S S i i
n n
, , max , , max ) ( ) (
/
| ) (
/
| ) (
) , ( ) , (
( ) ) ( ) , (
) , (
T S v E c f
n
f
E c
T S i
N i i
n
i
s =

e
e
-
.

Next, we analyze claims reallocation games by considering their cores. Given a
coalitional form game (N,v), an award vector ( )
n
N i i
R x e
e
is a feasible allocation if
) (N v x
N
s . A feasible allocation ( )
N i i
x
e
is dominated by S if there exists a feasible
allocation ( )
N i i
y
e
such that S i y x
i i
e < , and ) (
) , (
S v y
n
f
E c S
s . Since ) (
) , (
S v y
n
f
E c S
s ,
the members of S can get at least ( )
S i i
y
e
by themselves under the assurable scenario.
So, if a division plan ( )
N i i
x
e
, which is dominated by S, is proposed, the members of S
must have an objection to this proposal.
The core of a claims reallocation game is the set of feasible allocations which is not
dominated by any SN. I f an allocation which belongs in core is proposed, then
no coalition can improve their awards by themselves in the assurable level. Therefore,
under the assurable scenario, no coalition has an incentive to reject this allocation. I n
this sense, an allocation which belongs in core is a stable consequences of the
bargaining among N. Since an claims reallocation games under a rule
n
f is super
additive, we can define the core of ( )
n
f
E c
v N
) , (
, , which denotes ( )
n
f
E c
v C
) , (
, as
( ) { } | = _ > = e = S N S N v x and N v x R x v C
n n n
f
E c S
f
E c N
n f
E c
. ), ( ) ( |
) , ( ) , ( ) , (
.
We can similarly define the core of a claims reallocation game.
24
I f there exists a problem (c,E) such that the core of ( )
n
f
E c
v N
) , (
, is empty, then for each
feasible allocation, there must exist SN which can improve their awards by
reallocating their claims. Then, it becomes difficult to make an agreement on how to
divide a resource under an established rule
n
f . Therefore, we require the following
axiom to division rules in order for claimants to bargain smoothly how to divide E.

Core NonEmptiness(-CNE). For any
n
D E c e ) , ( , ( )
n
f
E c
v N
) , (
, has the nonempty
core.

I n the context of implementation theory, we can interpret core nonemptiness in
another way. Let us regard
n
f as a social choice function social planners want to
implement. I f there exists a problem (c,E) such that { } e
eN i
n
i
E c f ) , ( ( )
n
f
E c
v C
) , (
, then
there is no guarantee for { }
N i
n
i
E c f
e
) , ( to be actually implemented even if this social
choice function
n
f is established as a law, since there exists SN the members of
which have a objection to the allocation { }
N i
n
i
E c f
e
) , ( under a rule
n
f . Then,
{ }
N i
n
i
E c f
e
) , ( should be in the core of ( )
n
f
E c
v N
) , (
, in order to guarantee that
{ }
N i
n
i
E c f
e
) , ( is actually implemented. Core nonemptiness is of course a necessary
condition for
n
f to be implemented in the core allocation.

Core I mplementability (-CI ). For any
n
D E c e ) , ( , { } e
eN i
n
i
E c f ) , ( ( )
n
f
E c
v C
) , (
.

I f for each SN the members of S evaluate the worth of S by unpreventable level,
core nonemptiness and implementability can be rewritten as follows.

Core NonEmptiness(-CNE). For any
n
D E c e ) , ( , ( )
n
f
E c
v N
) , (
, has the nonempty
core.
25
Core I mplementability (-CI ). For any
n
D E c e ) , ( , { } e
eN i
n
i
E c f ) , ( ( )
n
f
E c
v C
) , (
.

Since core core, we can easily check that -CNE implies -CNE and that
-CI implies -CI .
Next, we characterize generalized proportional rules based on the axioms related to
the core of claims reallocation games. Since -CNE is the weakest among these axioms,
we first study the axiomatization of the proportional rules based on -CNE.

Theorem 5.5. Let n3. A rule satisfies -CNE, CON and OB if and only if it is a
generalized proportional rule.

Proof. To proof this theorem, we make use of theorem 4.1. By theorem 4.1, it is
sufficient to prove that -CNE is equivalent to DEC.

Claim 5.6. Assume CON, then -CNE is equivalent to DEC.
Proof. For any SN and (c,E), (c,E)
n
D e , if
N N
c c ' = , E= E and
S S
c c ' = , consider
(c,E)
n
D e such that
i i
c c = ' ' ,i S and
j j
c c ' = ' ' ,j N/S. Assuming CON,
n
f
must satisfy NAR. Then,

e e e e
' ' ' ' ' ' ' ' = ' ' ' ' =
S N i
n
i
N i
n
i
S i
n
i
S i
n
i
E c f E c f E c f E c f
/
) , ( ) , ( ) , ( ) , (

e e e
' ' = =
S i
n
i
S N i
n
i
N i
n
i
E c f E c f E c f ) , ( ) ' , ' ( ) ' , ' (
/

by CON and NAR. Therefore,
( ) { } ( ) { }
( ) ( ) ( )

e e
e
e
= =
= =
e e
S i
n
i
S i
S N j
j S i i
n
i
c c c c c c
f
E c
E c f E c c f S v
S N S N
S N j
j S S S i i
n
) , ( , , min max ) (
) / (
| |
) , (
/ /
/
,
for each | = _ S N S , .
So, an allocation ( )
N i i
E c f
e
) , ( must be in the core of ) (
) , (
S v
n
f
E c
which implies the core
of ( )
n
f
E c
v N
) , (
, is non-empty.
Next we prove the converse. Assume
n
f does not satisfy DEC. Then there must exist
N i e and
n
D E c E c e ' ' ) , ( ), , ( satisfying
i i
c c ' = ,
N N
c c ' = , and E E ' = , such that
26
) , ( ) , ( E c f E c f
i i
' ' > . For each N j e , by CON,
{ }
( ) E c c f E c f j N v
j N k k j
n
j
c c c
N i
n
i
f
E c
j N k N j N k k
n
, ) ( , min ) , ( )) /( (
) /(
| ) (
) , (
) /( ) /( ) /(
e
=
e
e
=

( )

e e
= >
) /(
) , ( , ) , (
j N k
n
k
n
j
N k
n
k
E c f E c f E c f .
And for N i e ,
{ }
( ) E c c f E c f i N v
i N k k i
n
i
c c c
N i
n
i
f
E c
i N i N i N k k
n
, ) ( , min ) , ( )) /( (
) /(
| ) (
) , (
) /( ) /( ) /(
e
=
e
e
=

( ) ( )

e e e
= > ' ' >
) /(
) , ( , ) , ( , ) , (
i N k
n
i
n
i
N k
n
k
n
i
N k
n
k
E c f E c f E c f E c f E c f .
Therefore,
) ( ) , ( ) , (
1
1
)) /( (
1
1
) , (
) /(
) , (
N v E c f E c f
n
k N v
n
n n
f
E c
N j
n
j
N k k N j
n
j
N k
f
E c
= =

>

e e e e
.
This inequity implies that ( )
n
f
E c
v N
) , (
, is not balanced. So the core of ( )
n
f
E c
v N
) , (
, must be
empty. (Bondereva [6] or Shapley [17].) Thus, -CNE must imply DEC.

As corollaries of theorem, we can conduct easily show the following statements.

Corollary 5.7. Let n3. A rule satisfies -CI , CON and OB if and only if it is a
generalized proportional rule.
Corollary 5.8. Assume n3. A rule satisfies -CNE , CON and OB if and only if it is a
generalized proportional rule. -CNE can be replaced by -CI .

I n the last of this chapter, we show two examples which show that -CNE is not
necessarily equivalent to DEC.

Example 5.9. Consider a rule
n
f such that E
c
c
E c f
N
i
N i
n
|
|
.
|

\
|
=
H
e
) , ( , for each iN. This
rule does not satisfy DEC. But since E
n
S S v
n
f
E c
n
|
.
|

\
|
s
1
) (
) , (
for each S N and
E
n
N N v
n
f
E c
n
|
.
|

\
|
=
1
) (
) , (
,
|
|
.
|

\
|
|
.
|

\
|
|
.
|

\
|
E
n
E
n
n n
1
, ,
1
L must be in the core of ( )
n
f
E c
v N
) , (
, .
27

Example 5.10. Assume n=3. Consider a problem
|
|
.
|

\
|
|
.
|

\
|
E
E E E
,
3
.
3
.
3
and a rule
3
f such
that

\
|
>
=
otherwise
c
c if E
f
N
i
i
0
2
3
, for each iN.
Of course, this rule
3
f satisfies DEC. But, the core of ( )
n
f
E c
v N
) , (
, must be empty since
E S v
n
f
E c
= ) (
) , (
, for any SN,| S| 2.

6. Concluding Remarks

I n this paper, we focus on four axioms which a division rule should be satisfied: no
advantageous reallocation, decentralizability, core nonemptiness and core
implementability. Though these four axioms are derived from different requirements,
they are mathematically equivalent to one another if a division rule satisfies
constantness. This fact makes it possible to characterize generalized proportional rules
in different ways.

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