Fair Division Is A Good Goal

How Do Mathematicians Cut Cake is an article that appeared recently on Priceonomics.com.  I am sure there are people somewhere spending months coming up with a rigorous proof of the efficacy of some way or other.  As the author points out, not many people other than wedding planners worry about it.

The principles go far beyond cake.  Children sharing, and housemates allocating rent are common.  There is an app for the rent sharing.

The point is that often things must be divided so all of the recipients are equally pleased or equally angry.  With complicated assets that is not as easy as people think.  Fair division is difficult.

The article presents some metrics for consideration.

  1. Will any person think they got a lesser piece?
  2. Will each derive equal joy?
  3. Will the division be such that any other division would involve someone getting less.
  4. Will the result be envy-free.
  5. Will the “I cut, you choose way work?”

There are many situations where fair division is important and the opportunity to invoke the principles should not be overlooked.

Estates are a common source of friction.  Shareholder agreements come to mind.  Bankruptcy proceedings are not uncommon sources of conflict.  Union/management negotiations.  Government spending.

The list is near endless and that is why it is so odd that not many have actually paid attention to the theory.  You should notice the reality even if you do not know what Su’s algorithm is about.  Many conflicts are easily avoidable.

Will your lawyer’s standard approach to building a will to divide an estate work for you? Try to assess the equally pleased aspect. 

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com  866-285-7772

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2 Responses to Fair Division Is A Good Goal

  1. I am currently working on a project to provide life,disability and dread disease cover for employees of one of my client a small practice.The challenge is that the employer has set aside an amount for this purpose but the employees vary in age,education and income so it makes it very difficult to please all as cover is dependent on these factors.I have drawn the quotations the younger ones will subsidize the older ones who albeit this will get much lower coverage.I seriously think that we can not have fair division and allocation in this instance without planting the seeds of discord among the employees but we will pull through with the explanation of the cause of the difference.Thank you Don this is very timely even though not slightly the same but the principles will surely assist

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