A Medieval Controversy About Profit and Loss Allocations

This paper analyses a controversy between Maimonides and Rabbi Abraham Ben David of Posquierres over the allocation of partnership profits and losses in the absence of a partnership contract. The Maimonidean allocation system depends upon whether the partnership is formed for business or non-business (consumption) activities. The controversy concerns the notion of indivisibilities in partnership capital. This early debate is analysed in light of the modern—including game-theoretic—cost allocation literature.