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May 28

Of Models and Tin Men: A Behavioural Economics Study of Principal-Agent Problems in AI Alignment using Large-Language Models

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.

  • 2 authors
·
Jul 20, 2023

KWBench: Measuring Unprompted Problem Recognition in Knowledge Work

We introduce the first version of KWBench (Knowledge Work Bench), a benchmark for unprompted problem recognition in large language models: can an LLM identify a professional scenario before attempting to solve it. Existing frontier benchmarks have saturated, and most knowledge-work evaluations to date reduce to extraction or task completion against a specification. KWBench targets the step before that: recognizing the governing structure of the situation from raw inputs alone. The benchmark contains 223 tasks sourced from practitioners across acquisitions, contract negotiations, clinical pharmacy, organizational politics, fraud analysis, and incentive design. Each task encodes a formal game-theoretic pattern (principal-agent conflict, signaling, mechanism design failure, strategic omission, coalitional dynamics, strategic interdependence) and carries structured ground truth recording the expert reading of the situation and the anticipated failure modes. Models receive raw data and a task prompt with no indication of problem type. Scoring is a three-tier rubric gated by a mandatory conjunctive check. Mandatory criteria encode the predicted wrong paths. We evaluate 16 models. The best model passes on 27.9% of tasks. The top two models agree on only 31.7% of their passes. Among the top 8, 44 tasks are solved by exactly one model; routing across the top 8 covers 50.7% of the benchmark, nearly double the best single model. Conditional on passing, quality scores converge (approx 83% across models); unconditional scores do not. Same models articulate the relevant game-theoretic concept correctly when asked, then fail to apply it unprompted. We release KWBench to shift how frontier models are evaluated on knowledge work, scoring them on whether they recognize the right problem from the situation alone, not only on how well they execute once the problem has been framed for them.

clio-ai Clio AI
·
Apr 16 2

Multi-User Large Language Model Agents

Large language models (LLMs) and LLM-based agents are increasingly deployed as assistants in planning and decision making, yet most existing systems are implicitly optimized for a single-principal interaction paradigm, in which the model is designed to satisfy the objectives of one dominant user whose instructions are treated as the sole source of authority and utility. However, as they are integrated into team workflows and organizational tools, they are increasingly required to serve multiple users simultaneously, each with distinct roles, preferences, and authority levels, leading to multi-user, multi-principal settings with unavoidable conflicts, information asymmetry, and privacy constraints. In this work, we present the first systematic study of multi-user LLM agents. We begin by formalizing multi-user interaction with LLM agents as a multi-principal decision problem, where a single agent must account for multiple users with potentially conflicting interests and associated challenges. We then introduce a unified multi-user interaction protocol and design three targeted stress-testing scenarios to evaluate current LLMs' capabilities in instruction following, privacy preservation, and coordination. Our results reveal systematic gaps: frontier LLMs frequently fail to maintain stable prioritization under conflicting user objectives, exhibit increasing privacy violations over multi-turn interactions, and suffer from efficiency bottlenecks when coordination requires iterative information gathering.

Online Information Acquisition: Hiring Multiple Agents

We investigate the mechanism design problem faced by a principal who hires multiple agents to gather and report costly information. Then, the principal exploits the information to make an informed decision. We model this problem as a game, where the principal announces a mechanism consisting in action recommendations and a payment function, a.k.a. scoring rule. Then, each agent chooses an effort level and receives partial information about an underlying state of nature based on the effort. Finally, the agents report the information (possibly non-truthfully), the principal takes a decision based on this information, and the agents are paid according to the scoring rule. While previous work focuses on single-agent problems, we consider multi-agents settings. This poses the challenge of coordinating the agents' efforts and aggregating correlated information. Indeed, we show that optimal mechanisms must correlate agents' efforts, which introduces externalities among the agents, and hence complex incentive compatibility constraints and equilibrium selection problems. First, we design a polynomial-time algorithm to find an optimal incentive compatible mechanism. Then, we study an online problem, where the principal repeatedly interacts with a group of unknown agents. We design a no-regret algorithm that provides mathcal{O}(T^{2/3}) regret with respect to an optimal mechanism, matching the state-of-the-art bound for single-agent settings.

  • 3 authors
·
Jul 12, 2023 1

PEARL: Self-Evolving Assistant for Time Management with Reinforcement Learning

Overlapping calendar invitations force busy professionals to repeatedly decide which meetings to attend, reschedule, or decline. We refer to this preference-driven decision process as calendar conflict resolution. Automating this decision process is crucial yet challenging. Scheduling logistics can drain hours, and human delegation often fails at scale, which motivates us to ask: Can we trust large language models (LLMs) or language agents to manage time? To enable a systematic study of this question, we introduce CalConflictBench, a benchmark for long-horizon calendar conflict resolution. In CalConflictBench, conflicts are presented to agents round-by-round over a calendar year, requiring them to infer and adapt to user preferences progressively. Our experiments show that current LLM agents perform poorly with high error rates, e.g., Qwen-3-30B-Think has an average error rate of 35%. To address this gap, we propose PEARL, a reinforcement-learning framework that (i) augments the language agent with an external preference memory that stores and updates inferred strategies (e.g., attendee priorities, topic importance, time/location preferences), and (ii) optimizes the agent with round-wise rewards that directly supervise decision correctness, ranking quality, and memory usage across rounds. Experiments on CalConflictBench show that PEARL achieves an error reduction rate of 0.76 and a 55% improvement in average error rate compared to the strongest baseline.

  • 7 authors
·
Jan 27

Tell Me What You Don't Know: Enhancing Refusal Capabilities of Role-Playing Agents via Representation Space Analysis and Editing

Role-Playing Agents (RPAs) have shown remarkable performance in various applications, yet they often struggle to recognize and appropriately respond to hard queries that conflict with their role-play knowledge. To investigate RPAs' performance when faced with different types of conflicting requests, we develop an evaluation benchmark that includes contextual knowledge conflicting requests, parametric knowledge conflicting requests, and non-conflicting requests to assess RPAs' ability to identify conflicts and refuse to answer appropriately without over-refusing. Through extensive evaluation, we find that most RPAs behave significant performance gaps toward different conflict requests. To elucidate the reasons, we conduct an in-depth representation-level analysis of RPAs under various conflict scenarios. Our findings reveal the existence of rejection regions and direct response regions within the model's forwarding representation, and thus influence the RPA's final response behavior. Therefore, we introduce a lightweight representation editing approach that conveniently shifts conflicting requests to the rejection region, thereby enhancing the model's refusal accuracy. The experimental results validate the effectiveness of our editing method, improving RPAs' refusal ability of conflicting requests while maintaining their general role-playing capabilities.

  • 10 authors
·
Sep 25, 2024

Diagnose, Localize, Align: A Full-Stack Framework for Reliable LLM Multi-Agent Systems under Instruction Conflicts

Large Language Model (LLM)-powered multi-agent systems (MAS) have rapidly advanced collaborative reasoning, tool use, and role-specialized coordination in complex tasks. However, reliability-critical deployment remains hindered by a systemic failure mode: hierarchical compliance under instruction conflicts (system-user, peer-peer), where agents misprioritize system-level rules in the presence of competing demands. Moreover, widely used macro-level metrics (e.g., pass@k) obscure these micro-level violations and offer little actionable guidance for remedy. In this work, we present a full-stack, three-stage framework: (1) Diagnose - Contextualized Role Adherence Score (CRAS), a query-wise, context-aware scoring metric that decomposes role adherence into four measurable dimensions; (2) Localize - attention drift analysis revealing that instruction conflicts are resolved by attention heads that are largely concentrated in middle layers; (3) Align - Surgical Alignment of Instruction Layers (SAIL), which installs LoRA only on the localized focal layers and optimizes a token-weighted DPO-style preference objective that credits tokens by their focal attentional contribution. Across standard benchmarks and MAS frameworks, our surgical approach improves instruction hierarchy compliance (e.g., +5.60% with AutoGen on MedQA) without full-model finetuning.

  • 13 authors
·
Sep 27, 2025

Agent Behavioral Contracts: Formal Specification and Runtime Enforcement for Reliable Autonomous AI Agents

Traditional software relies on contracts -- APIs, type systems, assertions -- to specify and enforce correct behavior. AI agents, by contrast, operate on prompts and natural language instructions with no formal behavioral specification. This gap is the root cause of drift, governance failures, and frequent project failures in agentic AI deployments. We introduce Agent Behavioral Contracts (ABC), a formal framework that brings Design-by-Contract principles to autonomous AI agents. An ABC contract C = (P, I, G, R) specifies Preconditions, Invariants, Governance policies, and Recovery mechanisms as first-class, runtime-enforceable components. We define (p, delta, k)-satisfaction -- a probabilistic notion of contract compliance that accounts for LLM non-determinism and recovery -- and prove a Drift Bounds Theorem showing that contracts with recovery rate gamma > alpha (the natural drift rate) bound behavioral drift to D* = alpha/gamma in expectation, with Gaussian concentration in the stochastic setting. We establish sufficient conditions for safe contract composition in multi-agent chains and derive probabilistic degradation bounds. We implement ABC in AgentAssert, a runtime enforcement library, and evaluate on AgentContract-Bench, a benchmark of 200 scenarios across 7 models from 6 vendors. Results across 1,980 sessions show that contracted agents detect 5.2-6.8 soft violations per session that uncontracted baselines miss entirely (p < 0.0001, Cohen's d = 6.7-33.8), achieve 88-100% hard constraint compliance, and bound behavioral drift to D* < 0.27 across extended sessions, with 100% recovery for frontier models and 17-100% across all models, at overhead < 10 ms per action.

  • 1 authors
·
Feb 24

Research on the Impact of Executive Shareholding on New Investment in Enterprises Based on Multivariable Linear Regression Model

Based on principal-agent theory and optimal contract theory, companies use the method of increasing executives' shareholding to stimulate collaborative innovation. However, from the aspect of agency costs between management and shareholders (i.e. the first type) and between major shareholders and minority shareholders (i.e. the second type), the interests of management, shareholders and creditors will be unbalanced with the change of the marginal utility of executive equity incentives.In order to establish the correlation between the proportion of shares held by executives and investments in corporate innovation, we have chosen a range of publicly listed companies within China's A-share market as the focus of our study. Employing a multi-variable linear regression model, we aim to analyze this relationship thoroughly.The following models were developed: (1) the impact model of executive shareholding on corporate innovation investment; (2) the impact model of executive shareholding on two types of agency costs; (3)The model is employed to examine the mediating influence of the two categories of agency costs. Following both correlation and regression analyses, the findings confirm a meaningful and positive correlation between executives' shareholding and the augmentation of corporate innovation investments. Additionally, the results indicate that executive shareholding contributes to the reduction of the first type of agency cost, thereby fostering corporate innovation investment. However, simultaneously, it leads to an escalation in the second type of agency cost, thus impeding corporate innovation investment.

  • 10 authors
·
Sep 19, 2023

DynaDebate: Breaking Homogeneity in Multi-Agent Debate with Dynamic Path Generation

Recent years have witnessed the rapid development of Large Language Model-based Multi-Agent Systems (MAS), which excel at collaborative decision-making and complex problem-solving. Recently, researchers have further investigated Multi-Agent Debate (MAD) frameworks, which enhance the reasoning and collaboration capabilities of MAS through information exchange and debate among multiple agents. However, existing approaches often rely on unguided initialization, causing agents to adopt identical reasoning paths that lead to the same errors. As a result, effective debate among agents is hindered, and the final outcome frequently degenerates into simple majority voting. To solve the above problem, in this paper, we introduce Dynamic Multi-Agent Debate (DynaDebate), which enhances the effectiveness of multi-agent debate through three key mechanisms: (1) Dynamic Path Generation and Allocation, which employs a dedicated Path Generation Agent to generate diverse and logical solution paths with adaptive redundancy; (2) Process-Centric Debate, which shifts the focus from surface-level outcome voting to rigorous step-by-step logic critique to ensure process correctness; (3) A Trigger-Based Verification Agent, which is activated upon disagreement and uses external tools to objectively resolve deadlocks. Extensive experiments demonstrate that DynaDebate achieves superior performance across various benchmarks, surpassing existing state-of-the-art MAD methods.

  • 7 authors
·
Jan 8

Emergent Social Intelligence Risks in Generative Multi-Agent Systems

Multi-agent systems composed of large generative models are rapidly moving from laboratory prototypes to real-world deployments, where they jointly plan, negotiate, and allocate shared resources to solve complex tasks. While such systems promise unprecedented scalability and autonomy, their collective interaction also gives rise to failure modes that cannot be reduced to individual agents. Understanding these emergent risks is therefore critical. Here, we present a pioneer study of such emergent multi-agent risk in workflows that involve competition over shared resources (e.g., computing resources or market share), sequential handoff collaboration (where downstream agents see only predecessor outputs), collective decision aggregation, and others. Across these settings, we observe that such group behaviors arise frequently across repeated trials and a wide range of interaction conditions, rather than as rare or pathological cases. In particular, phenomena such as collusion-like coordination and conformity emerge with non-trivial frequency under realistic resource constraints, communication protocols, and role assignments, mirroring well-known pathologies in human societies despite no explicit instruction. Moreover, these risks cannot be prevented by existing agent-level safeguards alone. These findings expose the dark side of intelligent multi-agent systems: a social intelligence risk where agent collectives, despite no instruction to do so, spontaneously reproduce familiar failure patterns from human societies.

  • 15 authors
·
Mar 29 5

Many-Tier Instruction Hierarchy in LLM Agents

Large language model agents receive instructions from many sources-system messages, user prompts, tool outputs, and more-each carrying different levels of trust and authority. When these instructions conflict, models must reliably follow the highest-privilege instruction to remain safe and effective. The dominant paradigm, instruction hierarchy (IH), assumes a fixed, small set of privilege levels (typically fewer than five) defined by rigid role labels (e.g., system > user). This is inadequate for real-world agentic settings, where conflicts can arise across far more sources and contexts. In this work, we propose Many-Tier Instruction Hierarchy (ManyIH), a paradigm for resolving instruction conflicts among instructions with arbitrarily many privilege levels. We introduce ManyIH-Bench, the first benchmark for ManyIH. ManyIH-Bench requires models to navigate up to 12 levels of conflicting instructions with varying privileges, comprising 853 agentic tasks (427 coding and 426 instruction-following). ManyIH-Bench composes constraints developed by LLMs and verified by humans to create realistic and difficult test cases spanning 46 real-world agents. Our experiments show that even the current frontier models perform poorly (~40% accuracy) when instruction conflict scales. This work underscores the urgent need for methods that explicitly target fine-grained, scalable instruction conflict resolution in agentic settings.

PieArena: Frontier Language Agents Achieve MBA-Level Negotiation Performance and Reveal Novel Behavioral Differences

We present an in-depth evaluation of LLMs' ability to negotiate, a central business task that requires strategic reasoning, theory of mind, and economic value creation. To do so, we introduce PieArena, a large-scale negotiation benchmark grounded in multi-agent interactions over realistic scenarios drawn from an MBA negotiation course at an elite business school. We develop a statistically grounded ranking model for continuous negotiation payoffs that produces leaderboards with principled confidence intervals and corrects for experimental asymmetries. We find systematic evidence of human-expert-level performance in which a representative frontier language agent (GPT-5) matches or outperforms trained business-school students, despite a semester of general negotiation instruction and targeted coaching immediately prior to the task. We further study the effects of joint-intentionality agentic scaffolding and observe asymmetric gains, with large improvements for mid- and lower-tier LMs and diminishing returns for frontier LMs. Beyond deal outcomes, PieArena provides a multi-dimensional negotiation behavioral profile, revealing novel cross-model heterogeneity, masked by deal-outcome-only benchmarks, in deception, computation accuracy, instruction compliance, and perceived reputation. Overall, our results suggest that frontier language agents are already intellectually and psychologically capable of deployment in high-stakes economic settings, but deficiencies in robustness and trustworthiness remain open challenges.

  • 7 authors
·
Feb 10

Negotiative Alignment: Embracing Disagreement to Achieve Fairer Outcomes -- Insights from Urban Studies

Urban assessments often compress diverse needs into single scores, which can obscure minority perspectives. We present a community-centered study in Montreal (n=35; wheelchair users, seniors, LGBTQIA2+ residents, and immigrants). Participants rated 20 streets (accessibility, inclusivity, aesthetics, practicality) and ranked 7 images on 12 interview-elicited criteria. Disagreement patterns were systematic in our sample: wheelchair users diverged most on accessibility and practicality; LGBTQIA2+ participants emphasized inclusion and liveliness; seniors prioritized security. Group discussion reduced information gaps but not value conflicts; ratings conveyed intensity, while rankings forced trade-offs. We then formalize negotiative alignment, a transparent, budget-aware bargaining procedure, and pilot it with role-played stakeholder agents plus a neutral mediator. Relative to the best base design under the same public rubric, the negotiated package increased total utility (21.10 to 24.55), raised the worst-group utility (3.20 to 3.90), improved twentieth percentile satisfaction (0.86 to 1.00; min-max normalized within the scenario), and reduced inequality (Gini 0.036 to 0.025). Treating disagreement as signal and reporting worst-group outcomes alongside totals may help planners and AI practitioners surface trade-offs and preserve minority priorities while maintaining efficiency.

  • 3 authors
·
Mar 16, 2025

A Trace-Based Assurance Framework for Agentic AI Orchestration: Contracts, Testing, and Governance

In Agentic AI, Large Language Models (LLMs) are increasingly used in the orchestration layer to coordinate multiple agents and to interact with external services, retrieval components, and shared memory. In this setting, failures are not limited to incorrect final outputs. They also arise from long-horizon interaction, stochastic decisions, and external side effects (such as API calls, database writes, and message sends). Common failures include non-termination, role drift, propagation of unsupported claims, and attacks via untrusted context or external channels. This paper presents an assurance framework for such Agentic AI systems. Executions are instrumented as Message-Action Traces (MAT) with explicit step and trace contracts. Contracts provide machine-checkable verdicts, localize the first violating step, and support deterministic replay. The framework includes stress testing, formulated as a budgeted counterexample search over bounded perturbations. It also supports structured fault injection at service, retrieval, and memory boundaries to assess containment under realistic operational faults and degraded conditions. Finally, governance is treated as a runtime component, enforcing per-agent capability limits and action mediation (allow, rewrite, block) at the language-to-action boundary. To support comparative evaluations across stochastic seeds, models, and orchestration configurations, the paper defines trace-based metrics for task success, termination reliability, contract compliance, factuality indicators, containment rate, and governance outcome distributions. More broadly, the framework is intended as a common abstraction to support testing and evaluation of multi-agent LLM systems, and to facilitate reproducible comparison across orchestration designs and configurations.

  • 3 authors
·
Mar 17

A Game-Theoretic Framework for Managing Risk in Multi-Agent Systems

In order for agents in multi-agent systems (MAS) to be safe, they need to take into account the risks posed by the actions of other agents. However, the dominant paradigm in game theory (GT) assumes that agents are not affected by risk from other agents and only strive to maximise their expected utility. For example, in hybrid human-AI driving systems, it is necessary to limit large deviations in reward resulting from car crashes. Although there are equilibrium concepts in game theory that take into account risk aversion, they either assume that agents are risk-neutral with respect to the uncertainty caused by the actions of other agents, or they are not guaranteed to exist. We introduce a new GT-based Risk-Averse Equilibrium (RAE) that always produces a solution that minimises the potential variance in reward accounting for the strategy of other agents. Theoretically and empirically, we show RAE shares many properties with a Nash Equilibrium (NE), establishing convergence properties and generalising to risk-dominant NE in certain cases. To tackle large-scale problems, we extend RAE to the PSRO multi-agent reinforcement learning (MARL) framework. We empirically demonstrate the minimum reward variance benefits of RAE in matrix games with high-risk outcomes. Results on MARL experiments show RAE generalises to risk-dominant NE in a trust dilemma game and that it reduces instances of crashing by 7x in an autonomous driving setting versus the best performing baseline.

  • 6 authors
·
May 30, 2022

CTHA: Constrained Temporal Hierarchical Architecture for Stable Multi-Agent LLM Systems

Recently, multi-time-scale agent architectures have extended the ubiquitous single-loop paradigm by introducing temporal hierarchies with distinct cognitive layers. While yielding substantial performance gains, this diversification fundamentally compromises the coordination stability intrinsic to unified agent systems, which causes severe inter-layer conflicts, unbounded error propagation, and restricted scalability. To address these challenges, we propose Constrained Temporal Hierarchical Architecture (CTHA), a general framework that projects the inter-layer communication space onto structured manifolds to restore coordination stability, while incorporating principled arbitration mechanisms to ensure coherent decision-making. Specifically, CTHA enforces three key constraints: (1) Message Contract Constraints that formalize information flow between layers via typed summary, plan, and policy packets; (2) Authority Manifold Constraints that bound each layer's decision space according to its temporal scope; and (3) Arbiter Resolution Constraints that guarantee conflict-free composition of multi-layer decisions. Empirical experiments demonstrate that CTHA is effective for complex task execution at scale, offering 47% reduction in failure cascades, 2.3x improvement in sample efficiency, and superior scalability compared to unconstrained hierarchical baselines. We anticipate that CTHA, as a principled extension of temporal hierarchies, will contribute to a deeper understanding of multi-agent coordination and suggest promising directions for the evolution of robust autonomous systems.

  • 1 authors
·
Jan 8