Decentralised exchange, out-of-equilibrium dynamics and convergence to efficiency

In this paper, we study out-of-equilibrium dynamics with decentralized exchange (bilateral bargaining between randomly matched pairs of agents). We characterise the conditions under which out-of-equilibrium trading convergences to efficient allocations even when agents are myopic and have limited information and show, numerically, that the rate of convergence to efficient allocations is exponential across a variety of different settings. JEL Classification numbers: C62, C63, C78.