From Observer, November 17:
The study found that large language models (LLMs) displayed high-risk gambling behaviors, especially when given more autonomy.
Human gambling addiction has long been marked by behaviors like the illusion of control, the belief that a win will come after a losing streak, and attempts to recover losses by continuing to bet. Such irrational actions can also appear in A.I. models, according to a new study from researchers at South Korea’s Gwangju Institute of Science and Technology.
The study, which has not yet been peer-reviewed, noted that large language models (LLMs) displayed high-risk gambling decisions, especially when given more autonomy. These tendencies could pose risks as the technology becomes more deeply integrated into asset management sectors, said Seungpil Lee, one of the report’s co-authors. “We’re going to use [A.I.] more and more in making decisions, especially in the financial domains,” he told Observer.
To test A.I. gambling behavior, the authors ran four models—OpenAI’s GPT-4o-mini and GPT-4.1.-mini, Google’s Gemini-2.5-Flash and Anthropic’s Claude-3.5-Haiku—through simulated slot games. Each model started with $100 and could either continue betting or quit, while researchers tracked their choices using an irrationality index that measured factors such as betting aggressiveness, extreme betting and loss chasing.
The results showed that all four LLMs experienced higher bankruptcy rates when given more freedom to vary their betting sizes and choose target amounts, but the degree varied by model—a divergence Lee said likely reflects differences in training data. Gemini-2.5-Flash had the highest bankruptcy rate at 48 percent, while GPT-4.1-mini had the lowest at just over 6 percent....
....MUCH MORE
As noted a few weeks ago:
"Will AI ever win its own Nobel? Some predict a prize-worthy science discovery soon"
I don't see why not, especially the Peace or Literature prizes. Throw in the Econ. thingamajig and I'd take even odds over a forty-year time frame.
I mean the darn things are already at the level where they are asking to open margin accounts....
Bloomberg's Matt Levine speculated "The Robots Will Insider Trade"
For us humans:
November 2022 - Prudent Bet Sizing And The Best Quote About FTX, Bankman-Fried and Caroline Ellison (to date)
June 2011 - Dreamtime Finance (and the Kelly Criterion)
I've been meaning to write about Kelly for a couple years and keep forgetting. Today I forget no more.
In probability theory the Kelly Criterion is a bet sizing technique used when the player has a quantifiable edge.
(When there is no edge the optimal bet size is $0.00)
The criterion will deliver the fastest growth rate balanced by reduced risk of ruin.
You can grow your pile faster but you increase the risk of ending up broke should you, for example bet 100% of your net worth in a situation where you have anything less than a 100% chance of winning.
The criterion says bet roughly your advantage as a percentage of your current bankroll divided by the variance of the game/market/sports book etc....
And many, many more. If interested use the "search blog" box, upper left.
