Rethinking Prospect Theory for LLMs: Revealing the Instability of Decision-Making under Epistemic Uncertainty
This study tested if Large Language Models (LLMs) follow Prospect Theory, a model for human decision-making under uncertainty. The research found that LLM decision parameters are unstable when exposed to linguistic uncertainty, meaning they change significantly based on how uncertainty is expressed in words rather than numbers. This suggests PT frameworks are unreliable for real-world applications involving ambiguity.