Convergence of Local Dynamics to Balanced Outcomes in Exchange Networks

Abstract: Bargaining games on exchange networks have been studied by both economists and sociologists. A Balanced Outcome for such a game is an equilibrium concept that combines notions of stability and fairness. In a paper, Kleinberg and Tardos introduced balanced outcomes to the computer science community and provided a polynomial-time algorithm to compute the set of such outcomes. Their work left open a pertinent question: are there natural, local dynamics that converge quickly to a balanced outcome? In this paper, we provide a partial answer to this question by showing that simple edge-balancing dynamics converge to a balanced outcome whenever one exists.