Researcher stories: Use of game theory to determine what a fair bankruptcy procedure is like

The Netherlands, PhD and game theory  

He started his doctoral studies at the legal predecessor of the Corvinus. “After a year, I happened to meet Tamás Solymosi in the canteen of the university, at that time he was organising game theory research seminars, and asked me if I could offer someone who would like to attend the doctoral school in the Netherlands. I said, I definitely could. Myself.” So, he attended the doctoral school from 2004 to 2008 in Maastricht, and his supervisors were László Á. Kóczy and Jean-Jacques Herings. From his research related to the subject of the doctoral programme only, 4 joint international articles were produced. In one of them, the co-author was Miklós Pintér among others, with whom Péter wrote additional studies, involving PhD and MSc students, too.  

As a key research direction, Péter uses game theory methods to analyse money market situations occurring in real life. In his study published in 2019 and titled Liability Games, he examined the situation when a company is bankrupt, and it owes more money than it has on its account. “In this case, in the cooperative game theory, the question is always how to distribute wealth in a fair way, i.e. which debtor should get what amount. The obvious answer is that debtors should be paid proportionally, but there are other options, too, and we examine them through models. One of the interesting points in this is that we consider the debtor as an active player, too, who bargains in the same way as other players demanding the collection of the debt. While the latter may join forces and demand the money due to them together, the debtor may make offers, even ultimatums, by paying half of the debt or repaying the debt in instalments”, explained Péter Csóka, adding that according to their model, if the debtor bargains well, it may even avoid the bankruptcy.  

Co-author from co-tenant  

The period in Maastricht brought a lot of important connections for Péter, he even met the Nobel Prize winner John Forbes Nash professor on one occasion, whose life is depicted in the film titled A Beautiful Mind. “I usually show it to students how I handed over a tuna sandwich to him at the game theory world congress in Istanbul in 2012.” He also added that the world congress, which is held every four years, was organised in Budapest in 2021, with László Á. Kóczy as the main organiser, indicating the strong international embeddedness of Hungarian game theory.   

With another person he met in Maastricht, he developed a strong working relation: he shared an office with Burak Can for half a year. Through Burak Can, Péter learned about another research direction, too, for which a good example is their joint publication started in 2014 and published in 2021 in the Economic Theory journal, under the title How to choose a fair delegation?. The study examined how to represent opinions in a fair way, for example in the Parliament, in committees or at a peace conference. By fairness, they mean four natural requirements, one of them, for example, is that it should not be worthwhile for ‘voters’ selecting the delegates to distort their opinions. The key question is how much of the minority opinions could be ignored in a fair committee like that.

said Péter Csóka about their joint research.   

It is worthwhile but not enough to select a popular subject  

His cooperation with Jean-Jacques Herings is particularly successful, as they wrote two joint articles which were published in Management Science, a journal ranked in the top50 by the Financial Times. His paper titled Decentralized clearing in financial networks, which was published in 2018, became their most frequently cited article. In this paper, they examined current topics like block chains or network research through circular debts.  

In answer to the question whether the journal published that article because of the popular topics, he said that this point is less relevant in the editing principles: “This means maximum 5 per cent in the selection process. The approach and the conclusion drawn from the research are much more important”, the researcher said.  

All in all, Péter thinks that the frequency of citing this article is indicated by the fact that the topic made a lot of people toss up their heads, as the profession pays attention to an article about block chains, published in Management Science.   

Who should select this career?  

Péter Csóka loves the kind of freedom that is offered by the academic career, as he can work on topics he is interested in, and he can continuously satisfy his curiosity. “Inspiring and mentoring students or advising a company and doing research have good impacts on one another”, summarised Péter the diverse tasks he has at the University. He mentions the freedom of the research time as a positive feature, too, but adds quickly that you have to manage it cleverly, as it may be at the expense of your private life if you spend too much time writing and assessing articles, rewriting them, organising conferences and working in committees.  

Other advantages include the possibility of building professional links, primarily at conferences. “Then you can travel, learn about others people’s research topics, and later you might even write joint publications”.  

If he had to mention a characteristic feature that is necessary for researchers, he would mention persistence. “Having scientific articles accepted is a long process, it takes a lot of patience and self-confidence to believe that the topics researched by us will ripen with time”.