Strategic Tradeoffs Between Humans and AI in Multi-Agent Bargaining

As large language models (LLMs) are increasingly embedded in collaborative human activities such as business negotiations and group coordination, it becomes critical to evaluate both the performance gains they can achieve and how they interact in dynamic, multi-agent environments. Unlike traditional statistical agents such as Bayesian models, which may excel under well-specified conditions, large language models (LLMs) can generalize across diverse, real-world scenarios, raising new questions about how their strategies and behaviors compare to those of humans and other agent types. In this work, we compare outcomes and behavioral dynamics across humans (N = 216), LLMs (GPT-4o, Gemini 1.5 Pro), and Bayesian agents in a dynamic negotiation setting under identical conditions. Bayesian agents extract the highest surplus through aggressive optimization, at the cost of frequent trade rejections. Humans and LLMs achieve similar overall surplus, but through distinct behaviors: LLMs favor conservative, concessionary trades with few rejections, while humans employ more strategic, risk-taking, and fairness-oriented behaviors. Thus, we find that performance parity -- a common benchmark in agent evaluation -- can conceal fundamental differences in process and alignment, which are critical for practical deployment in real-world coordination tasks. By establishing foundational behavioral baselines under matched conditions, this work provides a baseline for future studies in more applied, variable-rich environments.