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Fairness Vs. Economic Efficiency: Lessons from an Interdisciplinary Analysis of Talmudic Bankruptcy Law

  • Itay Lipschütz and Mordechai E. Schwarz EMAIL logo
Published/Copyright: January 25, 2020
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Abstract

Bankruptcy problems are commonly associated with economic disasters, but can also emerge due to extraordinary economic performance The choice of a sharing rule has a significant potential effect on the economy’s general equilibrium. The economic literature hitherto neglected the search for an economically optimal bankruptcy solution and concentrated mainly on normative axiomatizations of sharing rules. However, its findings did not attract much attention of legal scholars. The purpose of this article is to create a symposium between the economic and legal literature on bankruptcy based on our interdisciplinary analysis of a fascinating polemic conducted by Jewish Law scholars over the course of fifteenth centuries about the appropriate bankruptcy solution.

JEL Classification: K35

Acknowledgements

This article was written while we were visiting scholars at the Berkeley Institute for Jewish Law and Israeli Law, Economy and Society, University of California, Berkeley. We are gratefully indebted to Robert J. Aumann, Ronen Avraham, Shachar Kariv, Hervé J. Moulin and three anonymous referees for very helpful discussions and comments.

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Published Online: 2020-01-25

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