Bilateral Pricing for Dynamic Association in Federated Edge Learning

Abstract

Devices and servers in Federated Edge Learning (FEL) are self-interested and resource-constrained, making it critical to design incentives to improve model performance. However, dynamic network conditions raise energy consumption, while data heterogeneity undermines device cooperation. Current research overlooks the interplay between system efficiency and device clustering, resulting in suboptimal updates. To address these challenges, we develop BENCH, a bilateral pricing mechanism consisting of three core rules aimed at incentivizing participation from both devices and servers. Specifically, we first design a reward allocation rule, based on the Rubinstein bargaining model, which dynamically allocates rewards. Theoretically, we derive a closed-form solution for this rule, demonstrating BENCH achieves Nash equilibrium. Secondly, we design a device partitioning rule that leverages modularity to group similar devices, facilitating personalized edge aggregation to accelerate local data adaptation. Thirdly, we design an edge matching rule that employs the Kuhn-Munkres algorithm to balance the load at edge servers, thus minimizing the congestion. Together, these three rules enable hierarchical optimization of pricing and associations, effectively mitigating the impact of dynamic costs and device heterogeneity. Extensive experiments demonstrate BENCH’s effectiveness in increasing device participation by 28.81% and improving model performance by 2.66% compared to state-of-the-art baselines.