Game theoretic analysis of a bankruptcy problem from the Talmud
Robert J. Aumann and Michael Maschler
The Hebrew University, 91904, Jerusalem, Israel
For three different bankruptcy problems, the 2000-year old Babylonian Talmud prescribes solutions that equal precisely the nucleoli of the corresponding coalitional games. A rationale for these solutions that is independent of 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, which always coincides with the nucleolus. Two other rationales for the same rule are suggested, in terms of other Talmudic principles. (Needless to say, the rule in question is not proportional division).