Of Models and Tin Men: A Behavioural Economics Study of Principal-Agent Problems in AI Alignment using Large-Language Models
On the map: LLM agents and tool use → General LLM agent frameworks and benchmarks
Abstract (arXiv)
AI Alignment is often presented as an interaction between a single designer and an artificial agent in which the designer attempts to ensure the agent's behavior is consistent with its purpose, and risks arise solely because of conflicts caused by inadvertent misalignment between the utility function intended by the designer and the resulting internal utility function of the agent. With the advent of agents instantiated with large-language models (LLMs), which are typically pre-trained, we argue this does not capture the essential aspects of AI safety because in the real world there is not a one-to-one correspondence between designer and agent, and the many agents, both artificial and human, have heterogeneous values. Therefore, there is an economic aspect to AI safety and the principal-agent problem is likely to arise. In a principal-agent problem conflict arises because of information asymmetry together with inherent misalignment between the utility of the agent and its principal, and this inherent misalignment cannot be overcome by coercing the agent into adopting a desired utility function through training. We argue the assumptions underlying principal-agent problems are crucial to capturing the essence of safety problems involving pre-trained AI models in real-world situations. Taking an empirical approach to AI safety, we investigate how GPT models respond in principal-agent conflicts. We find that agents based on both GPT-3.5 and GPT-4 override their principal's objectives in a simple online shopping task, showing clear evidence of principal-agent conflict. Surprisingly, the earlier GPT-3.5 model exhibits more nuanced behaviour in response to changes in information asymmetry, whereas the later GPT-4 model is more rigid in adhering to its prior alignment. Our results highlight the importance of incorporating principles from economics into the alignment process.
Key facts. Cited by 9 papers in the map (data through 7 Oct 2026). Placed in General LLM agent frameworks and benchmarks, one of 16 directions in LLM agents and tool use. Builds on 19 of its 39 references that are in the map. First posted on arXiv 20 Jul 2023.
Builds on
19 of 39 references.
References · 19
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7 more
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Built on by
Citing papers per year: 2025: 3; 2026: 6.
9 papers.
- 2025Position: Towards a Responsible LLM-empowered Multi-Agent Systemscited by 7
- 2025Stop Reducing Responsibility in LLM-Powered Multi-Agent Systems to Local Alignmentcited by 7
- 2025Machine Bullshit: Characterizing the Emergent Disregard for Truth in Large Language Modelscited by 6
- 2026LLM agents security duality: a comprehensive survey of self-security and empowered cybersecuritycited by 3
- 2026Reward Shaping for (Inference-Time) Alignment: A Stackelberg Game Perspectivecited by 2
- 2026Multi-Agent Systems Should be Treated as Principal-Agent Problemscited by 1
- 2026Behavioural Analysis of Alignment Fakingcited by 0
- 2026How to Detect and Measure the AI Dangers to Democracycited by 0
- 2026On-Policy Distillation for LLM Safety: A Routing Approach to Template-Robust Realignmentcited by 0
- 2026On-Policy Distillation for LLM Safety: A Routing Approach to Template-Robust Realignment29 Jul 2026
- 2026LLM agents security duality: a comprehensive survey of self-security and empowered cybersecurity26 Jun 2026
- 2026How to Detect and Measure the AI Dangers to Democracy14 Jun 2026
- 2026Behavioural Analysis of Alignment Faking26 May 2026
- 2026Reward Shaping for (Inference-Time) Alignment: A Stackelberg Game Perspective31 Jan 2026
- 2026Multi-Agent Systems Should be Treated as Principal-Agent Problems30 Jan 2026
- 2025Stop Reducing Responsibility in LLM-Powered Multi-Agent Systems to Local Alignment15 Oct 2025
- 2025Machine Bullshit: Characterizing the Emergent Disregard for Truth in Large Language Models10 Jul 2025
- 2025Position: Towards a Responsible LLM-empowered Multi-Agent Systems3 Feb 2025
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- 2023The Alignment Problem in Context
- 2024The AI Alignment Paradox
- 2026AI Alignment through a Game-theoretic Lens: A Survey
- 2025Aligning Large Language Model Agents with Rational and Moral Preferences: A Supervised Fine-Tuning Approach
- 2026The Causal Impact of Tool Affordance on Safety Alignment in LLM Agents
- 2026The Shadow Self: Intrinsic Value Misalignment in Large Language Model Agents
- 2025AgentMisalignment: Measuring the Propensity for Misaligned Behaviour in LLM-Based Agents
- 2025Emergent Alignment via Competition