In a corporate bankruptcy auction in India, the financial creditors choose the winner based on the bids and the share of bankruptcy surplus (bid value minus liquidation value) offered towards their claim settlement. We show that self-interested bidders allocate the entire bankruptcy surplus to...

Rawls (1958) suggested that it is possible to arrive at a fair allocation in a 2-player Nash demand game by granting equal gains to both players. Rawls theorized that players themselves would select this allocation if they bargain from the 'original position'. Harsanyi (1958) suggested the...