I have a problem where I want to allocate a bonus to one of four parties in ratio to their existing balance (which can be positive or negative). If I used their balance over the total I would get wild results. How can I pro-rate this bonus based on existing balances ?

>I have a problem where I
>want to allocate a bonus
>to one of four parties

To one of four perties? Just one? If so, you do not have a problem, right?

So, I assume you want to reward each or several parties.

>in ratio to their existing
>balance (which can be positive
>or negative). If I
>used their balance over the
>total I would get wild
>results. How can I
>pro-rate this bonus based on
>existing balances ?

You have to devise a policy. There's no single optimal solution. What is the meaning of having a negative balance? Is a party with a negative balance a good customer. Do you benefit more from a customer with a negative balance or that with a positive balance? What kind of behavior would you like to encourage?

For every policy one can design some bonus distribution strategy, but a policy should come first.

Best,
Alexander Bogomolny

Alexander,

Thanks for your reply. I thought this was the case, but wanted to check there was no definitive way of doing this before discussing a policy decision.

Thanks,
Neil.