Constrained equal losses (CEL) is a division rule for solving bankruptcy problems.
According to this rule, each claimant should lose an equal amount from his or her claim, except that no claimant should receive a negative amount.
In the context of taxation, it is known as poll tax.
[1] There is a certain amount of money to divide, denoted by
Each claimant i has a claim denoted by
, that is, the estate is insufficient to satisfy all the claims.
The CEL rule says that each claimant i should receive
The rule can also be described algorithmically as follows: Examples with two claimants: Examples with three claimants: In the Jewish law, if several bidders participate in an auction and then revoke their bids simultaneously, they have to compensate the seller for the loss.
The loss is divided among the bidders according to the CEL rule.
It is the only rule satisfying the following sets of axioms: The constrained equal awards (CEA) rule is the dual of the CEL rule, that is: for each problem