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On manipulability in financial systems

Author

Listed:
  • Sudhölter, Peter

    (Department of Economics)

  • Calleja, Pedro

    (Departament de Matemàtica Econòmica, Financera i Actuarial)

  • Llerena, Francesc

    (Departament de Gestió d’Empreses)

Abstract

We investigate manipulability in the setting of financial systems by considering two weak forms of immunity: non-manipulability via merging and non-manipulability via splitting. Not surprisingly, non-manipulability via splitting is incompatible with some basic axioms: claim boundedness, limited liability, and absolute priority. Outstandingly, we introduce a large class of financial rules that are immune to manipulations via merging. This class includes the proportional financial rule We investigate manipulability in the setting of financial systems by considering two weak forms of immunity: non-manipulability via merging and non-manipulability via splitting. Not surprisingly, non-manipulability via splitting is incompatible with some basic axioms: claim boundedness, limited liability, and absolute priority. Outstandingly, we introduce a large class of financial rules that are immune to manipulations via merging. This class includes the proportional financial rule but also financial rules in accordance with parametric bankruptcy rules fulfilling non-manipulability via merging.

Suggested Citation

  • Sudhölter, Peter & Calleja, Pedro & Llerena, Francesc, 2021. "On manipulability in financial systems," Discussion Papers on Economics 8/2021, University of Southern Denmark, Department of Economics.
    • Handle: RePEc:hhs:sdueko:2021_008
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    References listed on IDEAS

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    Cited by:

    1. Calleja, Pedro & Llerena, Francesc, 2024. "Proportional clearing mechanisms in financial systems: An axiomatic approach," Journal of Mathematical Economics, Elsevier, vol. 111(C).
    2. Pedro Calleja & Francesc Llerena, 2023. "Proportional clearing mechanisms in financial systems: an axiomatic approach," UB School of Economics Working Papers 2023/442, University of Barcelona School of Economics.
    3. Calleja, Pedro & Llerena, Francesc & Sudhölter, Peter, 2023. "Remarks on solidarity in bankruptcy problems when agents merge or split," Mathematical Social Sciences, Elsevier, vol. 125(C), pages 61-64.
    4. Michel Grabisch & Hervé Moulin & José Manuel Zarzuelo, 2024. "Professor Peter Sudhölter (1957–2024)," International Journal of Game Theory, Springer;Game Theory Society, vol. 53(2), pages 289-294, June.

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    More about this item

    Keywords

    Financial systems; manipulability via merging; manipulability via splitting; parametric bankruptcy rules;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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