Question

al 5. Three sisters (Anna, Belle, and Chloe) wish to use the Kaaster Inheritance Procedure to divide pieces of furniture they shared as children. Their bids on each of the items are given in the following table. Determine the final outcome of this fair division if the three are to receive shares Item Anna Belle Chloe Dresser $150 3180 3275 Desk 150 165 Vanity 170 200 260 Tapestry 500 180 Total Bids Fair Share Items Total Bids Remaining share Surplus Surplus share Final Award (Items and $)

Answer 1

Knaster inheritance procedure describes the procedure to divide the assets when there are more than two persons. Steps involved are as follows:

1. The heirs – independently and simultaneously – submit monetary bids for the asset.

2.The high bidder is awarded the asset and that person places all but 1/n of his bid in a kitty.

3.Each of the other heirs withdraws from the kitty to the extent of 1/n of thier own bid.

4.The remaining money in the kitty is divided equally

Lets solve the question with the above steps for each of the assets:

a. Dresser:

Highest bid is from Chloe for $275 = Thus, she gets Dresser by paying $183.33 --- she pays $275 and gets back her share of $275/3 = $91.67, thus, net she pays $275-$91.67=$183.33

Anna gets fair share of her bid as $150/3 = $50

Belle gets fair share of her bid as $180/3 = $60

Thus, net money left in the pool (surplus)= $183.33-$50-$60=$73.33

b. Desk

Highest bid is from Anna for $180 = Thus, she gets Desk by paying $120 --- she pays $180 and gets back her share of $180/3 = $60, thus, net she pays $180-$60=$120

Belle gets fair share of her bid as $150/3 = $50

Chloe gets fair share of her bid as $165/3 = $55

Thus, net money left in the pool (surplus)= $120-$50-$55=$15

c. Vanity

Highest bid is from Chloe for $260 = Thus, she gets Vanity by paying $173.33 --- she pays $260 and gets back her share of $260/3 = $86.67, thus, net she pays $260-$86.67=$173.33

Anna gets fair share of her bid as $170/3 = $56.67

Belle gets fair share of her bid as $200/3 = $66.67

Thus, net money left in the pool (surplus)= $173.33-$56.67-$66.67=$50

d. Tapestry

Highest bid is from Chloe for $500 = Thus, she gets Vanity by paying $333.33--- she pays $500 and gets back her share of $500/3 = $166.67, thus, net she pays $500-$166.67=$333.33

Anna gets fair share of her bid as $400/3 = $133.33

Belle gets fair share of her bid as $250/3 = $83.33

Thus, net money left in the pool (surplus)= $333.33-$133.33-$83.33=$116.67

e. Total money left in the pool (surplus)= $73.33+$15+$50+$116.67 = $255 which is equally shared among Anna, Belle and Chloe and each get back $85 ($255/3).

f. Final award:

Anna gets Desk and receives $205 ($50-$120+$56.67+$133.33+$85)

Belle receives $345 ($60+$50+$66.67+$83.33+$85)

Chloe gets Dresser, Vanity and Tapestry and pays $550 (-$183.33+$55-$173.33-$333.33+$85)