# Local Performance vs. Out-of-Distribution Generalization: An Empirical Analysis of Personalized Federated Learning in Heterogeneous Data Environments

arXiv: https://arxiv.org/abs/2510.24503 · HTML: https://mlsanity.com/paper/2510.24503/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 15 of its 25 references that are in the map.
- First posted on arXiv 28 Oct 2025.

## Builds on (most cited first, 15 of 15)

- [Communication-Efficient Learning of Deep Networks from Decentralized Data](https://mlsanity.com/paper/1602.05629/) (2016)
- [Federated Optimization in Heterogeneous Networks](https://mlsanity.com/paper/1812.06127/) (2018)
- [Ditto: Fair and Robust Federated Learning Through Personalization](https://mlsanity.com/paper/2012.04221/) (2020)
- [Federated Learning on Non-IID Data Silos: An Experimental Study](https://mlsanity.com/paper/2102.02079/) (2021)
- [Federated Learning with Personalization Layers](https://mlsanity.com/paper/1912.00818/) (2019)
- [Adaptive Personalized Federated Learning](https://mlsanity.com/paper/2003.13461/) (2020)
- [Three Approaches for Personalization with Applications to Federated Learning](https://mlsanity.com/paper/2002.10619/) (2020)
- [Federated Learning of a Mixture of Global and Local Models](https://mlsanity.com/paper/2002.05516/) (2020)
- [Personalized Federated Learning with First Order Model Optimization](https://mlsanity.com/paper/2012.08565/) (2020)
- [Federated Learning for Generalization, Robustness, Fairness: A Survey and Benchmark](https://mlsanity.com/paper/2311.06750/) (2023)
- [pFL-Bench: A Comprehensive Benchmark for Personalized Federated Learning](https://mlsanity.com/paper/2206.03655/) (2022)
- [Private Federated Learning with Domain Adaptation](https://mlsanity.com/paper/1912.06733/) (2019)
- [Understanding Generalization of Federated Learning via Stability: Heterogeneity Matters](https://mlsanity.com/paper/2306.03824/) (2023)
- [PFLlib: A Beginner-Friendly and Comprehensive Personalized Federated Learning Library and Benchmark](https://mlsanity.com/paper/2312.04992/) (2023)
- [A Comparative Evaluation of FedAvg and Per-FedAvg Algorithms for Dirichlet Distributed Heterogeneous Data](https://mlsanity.com/paper/2309.01275/) (2023)

## Abstract (arXiv)

In the context of Federated Learning with heterogeneous data environments, local models tend to converge to their own local model optima during local training steps, deviating from the overall data distributions. Aggregation of these local updates, e.g., with FedAvg, often does not align with the global model optimum (client drift), resulting in an update that is suboptimal for most clients. Personalized Federated Learning approaches address this challenge by exclusively focusing on the average local performances of clients' models on their own data distribution. Generalization to out-of-distribution samples, which is a substantial benefit of FedAvg and represents a significant component of robustness, appears to be inadequately incorporated into the assessment and evaluation processes. This study involves a thorough evaluation of Federated Learning approaches, encompassing both their local performance and their generalization capabilities. Therefore, we examine different stages within a single communication round to enable a more nuanced understanding of the considered metrics. Furthermore, we propose and incorporate a modified approach of FedAvg, designated as Federated Learning with Individualized Updates (FLIU), extending the algorithm by a straightforward individualization step with an adaptive personalization factor. We evaluate and compare the approaches empirically using MNIST and CIFAR-10 under various distributional conditions, including benchmark IID and pathological non-IID, as well as additional novel test environments with Dirichlet distribution specifically developed to stress the algorithms on complex data heterogeneity.