Game theoretic analysis of negotiations under bankruptcy

Abstract

Abstract:We extend the contingent claims framework for the levered firm in explicitly modeling the resolution of financial distress under formal bankruptcy as a non-cooperative game between claimants under the supervision of the bankruptcy judge. The identity of the class of claimants proposing the first reorganization plan is found to be a key determinant of the likelihood of liquidation and of the renegotiated value of claims. Our quantitative results confirm the economic intuition that a bankruptcy design must tradeoff the initial priority of claims with the viability of reorganized firms.

The Use of Game Theory for Making Rational Decisions in Business Negations: A Conceptual Model

“…Hurwitz, Bernoulli-Laplace and Bayes-Laplace rules showed very similar results, and Hodges and Lehman rules have slightly larger winnings than the minimum winnings demonstrated by Wald rule. The obtained results confirmed the works of other researchers, stressing the importance of game theory for business negotiations support (Zavadskas et al, 2012;Hao et al, 2014;Houser & McCabe, 2014;Deng et al, 2014;Shoham & Brown, 2009;Suh & Park, 2010;Yu et al, 2013;Pooyandeh & Marceau, 2014;Yuan & Ma, 2012;Wilken et al, 2013;Annabi et al, 2012).…”

“…So, it is appropriate to apply heuristic algorithms in order to reflect the negotiations better. The methodology of this algorithm was created on the base of game theory (Deng et al, 2014;Hao et al, 2014;Houser & McCabe, 2014;Shoham & Brown 2009;Suh & Park, 2010;Yu et al, 2013;Pooyandeh & Marceau, 2014;Yuan & Ma, 2012;Wilken et al, 2013;Annabi et al, 2012;Zavadskas et al, 2012), on heuristic theory (Zhang et al, 2014;Azar 2014;Wang et al, 2011;Segundo et al, 2012;Lova et al, 2000;Mandow & Cruz, 2003;Wibowo & Deng, 2013), on graph theory (Arsene et al, 2012;Pancerz & Lewicki, 2014;Yu & Xu, 2012;Xu et al, 2013;Darvish et al, 2009) and on multi-criteria decision analysis (Zavadskas et al, 2014;Ginevičius et al, 2014;Nassiri-Mofakham et al, 2009;Wibowo & Deng, 2013;Lourenzutti & Krohling, 2014).…”

“…The possibilities of the application of game theory for management tasks were examined by various authors (Aurangzeb & Lewis, 2014;Brown & Shoham, 2009;Rufo et al, 2014;Chuah et al, 2014;Suh & Park, 2010;Lin et al, 2014;Oderanti et al, 2012;Deng et al, 2014;Hao et al, 2014;Houser & McCabe, 2014;Yu et al, 2013;Pooyandeh & Marceau, 2014;Yuan & Ma, 2012;Wilken et al, 2013;Annabi et al, 2012). The article explores game theory and important aspects of negotiations.…”