Balanced Outcomes in Wage Bargaining

Balanced outcomes are a subset of core outcomes that take into consideration fairness and agents’ power in bargaining networks. In this paper, following the seminal works by [3] and [6] on modeling and computing balanced outcomes in unitcapacity trading networks, we explore this concept further by considering its generalization in the so-called wage bargaining network where agents on one side (the employers side) may have multiple capacity. It turns out that previous definitions do not trivially extend to this setting. Our first contribution is to incorporate insights from the bargaining theory and define a generalized notion of balanced outcomes in wage bargaining networks. We then consider computational aspects of this newly proposed solutions. We show that there are polynomial-time combinatorial algorithms to compute such solutions in both unweighted and weighted graphs. Our algorithms and proofs are enabled by novel generalizations of techniques proposed by Kleinberg and Tardos and an original technique proposed in this paper called “loose chain”.

Authors

• Pingzhong Tang Institute for Interdisciplinary Information Sciences, Tsinghua University
• Dingli Yu

Keywords

• Bargaining and negotiation
• Cooperative games: theory &
• analysis
• Cooperative games: computation