Tâtonnement Dynamics for Fisher Markets with Chores

2025-11-26

AI Summary

This paper addresses the convergence failure of tâtonnement dynamics in chore markets. We propose “relative tâtonnement”—a price update rule based on normalized excess demand. Under continuous, convex, and 1-homogeneous disutility functions, we establish the first rigorous proof of global convergence to competitive equilibrium and characterize its quadratic convergence rate via an intrinsic connection to the gauge norm, thereby completing the full local stability analysis. Technically, we overcome the breakdown of conventional methods in negative-utility settings by constructing a nonsmooth yet regular objective function and integrating Eisenberg–Gale-type duality with gauge duality. For convex CES disutilities, the algorithm attains an ε-equilibrium in O(1/ε²) iterations—significantly strengthening theoretical guarantees and convergence efficiency for price adjustment in chore markets.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Search and Optimization: Non-convex Optimization

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Graph Algorithms and Modeling for the Web: Efficient manipulation of static and dynamic Web-related graphs
• Security and Privacy: Large-scale security measurements

Abstract

In this paper, we initiate the study of tâtonnement dynamics in markets with chores. Tâtonnement is a fundamental market dynamics, capturing how prices evolve when they are adjusted in proportion of their excess demand. While its convergence to a competitive equilibrium (CE) is well understood in goods markets for broad classes of utilities, no analogous results are known for chore markets. Analyzing tâtonnement in the chores market presents new challenges. Several elegant structural properties that facilitate convergence in goods markets-such as convexity of the equilibrium price set and monotonicity of excess demand under the tâtonnement price updates-fail to hold in the chore setting. Consistent with these difficulties, we first show that naïve tâtonnement diverges. To overcome this, we propose a modified process called relative tâtonnement, where prices are updated according to normalized excess demand. We prove its convergence to a CE under suitable step-size choices for a broad class of disutility functions, namely continuous, convex, and 1-homogeneous (CCH) disutilities. This class includes many standard forms such as linear and convex CES disutilities. Our proof proceeds by introducing a nonsmooth, nonconvex yet regular objective function-a generalization of the objective in the Eisenberg-Gale-type dual program introduced by [CKMN24]. For convex CES disutilities, where disutility is the weighted $p$-norm of the individual chore disutilities for $p in (1, infty)$, we show that relative tâtonnement converges to an $varepsilon$-CE in $O(1/varepsilon^2)$ iterations. This quadratic convergence rate is established by leveraging the polar gauge (or gauge dual) of the disutility function. Finally, following the framework of [AH58], we analyze the stability of CE and provide a complete characterization of local stability.

Problem

• Analyzing tâtonnement dynamics convergence in chore markets with disutilities
• Overcoming divergence through modified relative tâtonnement process
• Establishing convergence rates and stability for competitive equilibrium

Innovation

• Proposed relative tatonnement with normalized excess demand
• Proved convergence for continuous convex homogeneous disutilities
• Achieved quadratic convergence rate for convex CES disutilities