Reproducing and Extending Experiments in Behavioral Strategy with Large Language Models

Abstract: In this study, we propose LLM agents as a novel approach in behavioral strategy research, complementing simulations and laboratory experiments to advance our understanding of cognitive processes in decision-making. Specifically, we reproduce a human laboratory experiment in behavioral strategy using LLM generated agents and investigate how LLM agents compare to observed human behavior. Our results show that LLM agents effectively reproduce search behavior and decision-making comparable to humans. Extending our experiment, we analyze LLM agents' simulated "thoughts," discovering that more forward-looking thoughts correlate with favoring exploitation over exploration to maximize wealth. We show how this new approach can be leveraged in behavioral strategy research and address limitations.