# Simulating Tenant Responses to Energy Policy Interventions with Transaction-Cost-Aware LLM Agent

arXiv: https://arxiv.org/abs/2607.24341 · HTML: https://mlsanity.com/paper/2607.24341/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Placed in Financial trading and forecasting agents, one of 16 directions in LLM agents and tool use.
- Builds on 8 of its 26 references that are in the map.
- First posted on arXiv 27 Jul 2026.

## Placed in

- LLM agents and tool use / [Financial trading and forecasting agents](https://mlsanity.com/agents/financial-trading-and-forecasting-agents/)

## Builds on (most cited first, 8 of 8)

- [Training language models to follow instructions with human feedback](https://mlsanity.com/paper/2203.02155/) (2022)
- [LoRA: Low-Rank Adaptation of Large Language Models](https://mlsanity.com/paper/2106.09685/) (2021)
- [DeepSeekMath: Pushing the Limits of Mathematical Reasoning in Open Language Models](https://mlsanity.com/paper/2402.03300/) (2024)
- [Generative Agents: Interactive Simulacra of Human Behavior](https://mlsanity.com/paper/2304.03442/) (2023)
- [QLoRA: Efficient Finetuning of Quantized LLMs](https://mlsanity.com/paper/2305.14314/) (2023)
- [Out of One, Many: Using Language Models to Simulate Human Samples](https://mlsanity.com/paper/2209.06899/) (2022)
- [Using Large Language Models to Simulate Multiple Humans and Replicate Human Subject Studies](https://mlsanity.com/paper/2208.10264/) (2022)
- [Social Simulacra: Creating Populated Prototypes for Social Computing Systems](https://mlsanity.com/paper/2208.04024/) (2022)

## Abstract (arXiv)

Recent studies use Large language models (LLMs) to simulate human opinions and decisions by prompting models with demographic, attitudinal, or persona-based descriptions. Yet such simulations rarely model the practical, cognitive, or social frictions that shape how people respond to policy interventions. Perceived transaction cost (PTC) provides a useful lens for modeling the practical frictions that shape policy responses, such as information burden, administrative effort, coordination demands, and perceived uncertainty. We use this lens to develop a friction-aware persona modeling approach for LLM-based simulation. In the context of energy-efficient renovation (EER), tenants are represented not only by who they are demographically, but by how they perceive the costs, benefits, barriers, and uncertainties associated with proposed renovation plans. Using survey data collected from 1,068 citizens in the Netherlands, comprising approximately 40,548 survey question and answer pairs, we compare prompt-only and fine-tuned settings across GPT-3.5-turbo, Ministral-8B-Instruct, and Llama-3.1-8B-Instruct, and evaluate supervised fine-tuning (SFT) and Group Relative Policy Optimization (GRPO) for local open-weight models. Results show that incorporating PTC-based personas and reasoning consistently improves model performance across both prompt-only and fine-tuned settings, suggesting that PTC-based persona design provides a useful bridge between institutional policy theory and interpretable LLM-based policy simulation. Code is available at https://github.com/xiaweijie1996/socialagent.