Abstract
The USA Bankruptcy Code legislates the bankruptcy of firms. Any allocation mechanism that is legal according to the Bankruptcy Code is necessarily population monotonic. Bankruptcy rules yielding a population monotonic allocation scheme in the associated bankruptcy game are characterized by efficiency, reasonability (each claimant receives a nonnegative amount not exceeding his claim), and the thieve property. The thieve property for bankruptcy problems entails that if a claimant manages to escape with his claim, the amount allocated to each remaining claimant is not larger than his share in the original problem. Many bankruptcy rules studied in the literature are efficient, reasonable, self-consistent, and monotonic. Rules satisfying these axioms are shown to yield population monotonic allocation schemes.