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arXiv · 2609.11108

But How Would AI Agents Run a Town's Economy?

Sajal Regmi·Siddhartha Pudasaini·Chetan Phakami Pun
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Abstract

We placed 100 memory-equipped large language model (LLM) agents in charge of a closed, money-conserving spatial economy on real Pokhara Lakeside geography (earning wages, running businesses, setting prices) and ran this multi-agent simulation for up to 26 simulated weeks, well past the 1-2 weeks typical of agent-society studies. Across 91 validated runs (2.44M agent decisions, 21.5B tokens), the money stops moving, in a specific and measurable way. A 12x tourist demand shock raises business revenue 4.62x ($p<0.001$), which we decompose exactly into a 1.50x extensive margin (more businesses trading) and a 3.07x intensive margin (more revenue each). Monetary transmission stops there. Wages move 1.03x ($p=0.42$); 0.3% of 3,981 menu items are ever repriced ($p=0.47$). A randomized cash transfer (NPR 5,000 to 20 of 100 agents) shows the same pattern from the opposite direction: 96.7% is still held 311 pulses later, marginal propensity to consume 3-4% by two independent measures, indistinguishable from zero. The wealth distribution is consequently near-frozen at the horizon this literature uses ($ρ=0.964$ over 2 simulated weeks), but not frozen. $ρ$ falls to 0.832 at 12 weeks and 0.752 at 26, a horizon-dependence no short study can see. Matched ablations show which knob actually matters. Swapping the backing LLM moves every outcome we measure ($p=0.0039$); deleting agents' memory moves none of them detectably. A purely social tool fails 94-97% of the time across two model families, compared with ~96% success on economic tools, with no measurable shift away from it. Every headline number is verified twice, by a live validator and by an offline recomputation that reconciles each agent's wealth against its own signed transaction history, and we release the full run corpus for reanalysis.

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Sajal Regmi, Siddhartha Pudasaini, Chetan Phakami Pun. 2026-09-10. But How Would AI Agents Run a Town's Economy?. https://arxiv.org/abs/2609.11108

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