Bargaining Dynamics In Exchange Networks

We consider a one-sided assignment market or exchange network with transferable utility and the dynamics of bargaining in such a market. Our dynamical model is local, involving iterative updates of 'offers' based on estimated best alternative matches, in the spirit of pairwise Nash bargaining. Agents are not strategic in our model. We establish that when a balanced outcome (a generalization of the pairwise Nash bargaining solution to networks) exists, our dynamics converges rapidly to such an outcome. (C) 2014 Elsevier Inc. All rights reserved.