Approximating Human Strategic Reasoning with LLM-Enhanced Recursive Reasoners Leveraging Multi-agent Hypergames

Abstract: LLM-driven multi-agent-based simulations have been gaining traction with applications in game-theoretic and social simulations. While most implementations seek to exploit or evaluate LLM-agentic reasoning, they often do so with a weak notion of agency and simplified architectures. We implement a role-based multi-agent strategic interaction framework tailored to sophisticated recursive reasoners, providing the means for systematic in-depth development and evaluation of strategic reasoning. Our game environment is governed by the umpire responsible for facilitating games, from matchmaking through move validation to environment management. Players incorporate state-of-the-art LLMs in their decision mechanism, relying on a formal hypergame-based model of hierarchical beliefs. We use one-shot, 2-player beauty contests to evaluate the recursive reasoning capabilities of the latest LLMs, providing a comparison to an established baseline model from economics and data from human experiments. Furthermore, we introduce the foundations of an alternative semantic measure of reasoning to the k-level theory. Our experiments show that artificial reasoners can outperform the baseline model in terms of both approximating human behaviour and reaching the optimal solution.