Noise, Adaptation, and Strategy: Assessing LLM Fidelity in Decision-Making
This addresses the need for more realistic LLM evaluations in social science simulations, though it is incremental in proposing a new framework.
The paper tackled the problem of evaluating LLMs' ability to simulate human decision-making variability and adaptability, finding that LLMs converge on stable strategies that diverge from human behaviors, with human-derived noise narrowing but not closing the gap.
Large language models (LLMs) are increasingly used in social science simulations. While their performance on reasoning and optimization tasks has been extensively evaluated, less attention has been paid to their ability to simulate human decision-making's variability and adaptability. We propose a process-oriented evaluation framework with progressive interventions (Intrinsicality, Instruction, and Imitation) to examine how LLM agents adapt under different levels of external guidance and human-derived noise. We validate the framework on two classic economics tasks, irrationality in the second-price auction and decision bias in the newsvendor problem, showing behavioral gaps between LLMs and humans. We find that LLMs, by default, converge on stable and conservative strategies that diverge from observed human behaviors. Risk-framed instructions impact LLM behavior predictably but do not replicate human-like diversity. Incorporating human data through in-context learning narrows the gap but fails to reach human subjects' strategic variability. These results highlight a persistent alignment gap in behavioral fidelity and suggest that future LLM evaluations should consider more process-level realism. We present a process-oriented approach for assessing LLMs in dynamic decision-making tasks, offering guidance for their application in synthetic data for social science research.