# Competitive Market Behavior of LLMs

arXiv: https://arxiv.org/abs/2609.02580 · HTML: https://mlsanity.com/paper/2609.02580/

## Key facts

- Cited by 1 papers in the map (data through 14 Oct 2026).
- Placed in Financial trading and forecasting agents, one of 16 directions in LLM agents and tool use.
- Builds on 14 of its 26 references that are in the map.
- First posted on arXiv 2 Sep 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, 14 of 14)

- [Generative Agents: Interactive Simulacra of Human Behavior](https://mlsanity.com/paper/2304.03442/) (2023)
- [A Survey on Large Language Model based Autonomous Agents](https://mlsanity.com/paper/2308.11432/) (2023)
- [Out of One, Many: Using Language Models to Simulate Human Samples](https://mlsanity.com/paper/2209.06899/) (2022)
- [Large Language Models Empowered Agent-based Modeling and Simulation: A Survey and Perspectives](https://mlsanity.com/paper/2312.11970/) (2023)
- [EconAgent: Large Language Model-Empowered Agents for Simulating Macroeconomic Activities](https://mlsanity.com/paper/2310.10436/) (2023)
- [How Well Can LLMs Negotiate? NegotiationArena Platform and Analysis](https://mlsanity.com/paper/2402.05863/) (2024)
- [Vending-Bench: A Benchmark for Long-Term Coherence of Autonomous Agents](https://mlsanity.com/paper/2502.15840/) (2025)
- [Put Your Money Where Your Mouth Is: Evaluating Strategic Planning and Execution of LLM Agents in an Auction Arena](https://mlsanity.com/paper/2310.05746/) (2023)
- [CompeteAI: Understanding the Competition Dynamics in Large Language Model-based Agents](https://mlsanity.com/paper/2310.17512/) (2023)
- [Strategic Collusion of LLM Agents: Market Division in Multi-Commodity Competitions](https://mlsanity.com/paper/2410.00031/) (2024)
- [Large Language Models Miss the Multi-Agent Mark](https://mlsanity.com/paper/2505.21298/) (2025)
- [The Coming Crisis of Multi-Agent Misalignment: AI Alignment Must Be a Dynamic and Social Process](https://mlsanity.com/paper/2506.01080/) (2025)
- [Can Generative AI agents behave like humans? Evidence from laboratory market experiments](https://mlsanity.com/paper/2505.07457/) (2025)
- [LLM Bidders Preserve the Mechanism-Level Orderings of Human Bidders](https://mlsanity.com/paper/2507.09083/) (2025)

## Built on by (most cited first, 1 of 1)

- [Who Keeps the Gains from Personal AI Assistants? Seller Adaptation and the Unassisted in a Language-Model Market Simulation](https://mlsanity.com/paper/2610.05823/) (2026)

## Abstract (arXiv)

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.