arXiv AI By Yu Liu, Wenwen Li, Yifan Dou, Guangnan Ye

Recursive Reasoning or Statistical Extrapolation? In-Context Learning in Multi-Agent Interdependent Decision-Making

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The paper investigates whether in-context learning (ICL) in large language model agents reflects genuine recursive reasoning or simply statistical extrapolation. By testing LLM agents in a public goods game with manipulated historical feedback, the authors compare decision quality to a rational expectations equilibrium benchmark. They find that disrupting historical patterns eliminates the benefits of longer context, especially in highly interdependent settings, indicating that ICL behavior aligns more with statistical extrapolation than strategic reasoning.

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