Competitive Market Behavior of LLMs

Large language models (LLMs) are increasingly deployed as economic agents, yet there is little evidence whether LLM agents are suited for participating in market mechanisms designed for humans, and whether these mechanisms deliver desired outcomes when faced with LLM agents. We address this question by replicating seminal economic experiments, replacing human subjects with LLM agents. We place agents in a double auction environment, which is a widely-used market mechanism. We check whether such a market is able to deliver an efficient allocation of resources, thereby testing a novel dimension of alignment of LLM agents -- their compatibility with a fundamental market mechanism. We find that markets populated by LLM agents exhibit slower or no convergence towards market equilibrium, thus providing less efficient allocations than markets populated by humans. We then analyze agents' individual trading decisions and find substantial heterogeneity both across model families and market roles. We also run a lexical analysis of Chain-of-Thought (CoT) traces generated by the agents. We find that the decision to execute a trade rather than continue incrementally adjusting prices is associated with a shift from strategic considerations toward urgency. We publicly release our testing framework, which can be used for future evaluations.

SolarChain-Eval: A Physics-Constrained Benchmark for Trustworthy Economic Agents in Decentralized Energy Markets

As agentic AI systems are increasingly applied to cyber-physical environments, their evaluation requires assessment of both task performance and trustworthiness. In decentralized energy markets, autonomous agents may improve market utility, but may also exploit invalid physical data, create artificial liquidity, and produce unstable governance decisions. Therefore, we propose SolarChain-Eval, a physics-constrained benchmark for evaluating trustworthy economic agents. It formulates market governance as a Gymnasium-compatible Markov Decision Process, where agents make hourly decisions. SolarChain-Eval evaluates each policy across multiple dimensions, including market utility, physical safety, slippage, action smoothness, spatial fairness, and auditability. To support agentic evaluation, SolarChain-Eval incorporates an LLM-based Planner/Auditor layer. The Planner defines episode-level action bounds and audit rules, while the Auditor reviews and revises high-risk actions. All interventions are recorded through structured logs, including trigger signals, proposed actions, revised actions, and audit rationales. Experiments with static, random, myopic, RL, and RL+LLM policies reveal a clear utility-safety trade-off. RL agents improve market utility but can still produce unsafe behavior. When the physics penalty is removed, reward-maximizing agents exploit invalid generation and increase artificial liquidity. The LLM Planner/Auditor improves auditability and mitigates selected risks, but it cannot fully compensate for a misspecified reward function. These results indicate that trustworthy agentic AI evaluation requires both physical constraints and transparent intervention traces. We release data and code as open access on GitHub for replicability.