Noncooperative Human-AI Agent Dynamics

arXiv:2603.16916v1 Announce Type: new
Abstract: This paper investigates the dynamics of noncooperative interactions between artificial intelligence agents and human decision-makers in strategic environments. In particular, motivated by extensive literature in behavioral Economics, human agents are more faithfully modeled with respect to the state of the art using Prospect Theoretic preferences, while AI agents are modeled with standard expected utility maximization. Prospect Theory incorporates known cognitive heuristics employed by humans, including reference dependence and greater loss aversion relative to utility to relative gains. This paper runs different combinations of expected utility and prospect theoretic agents in a number of classic matrix games as well as examples specialized to tease out distinctions in strategic behavior with respect to preference functions, to explore the emergent behaviors from mixed population (human vs. AI) competition. Extensive numerical simulations are performed across AI, aware humans (those with full knowledge of the game structure and payoffs), and learning Prospect Agents (i.e., for AIs representing humans). A number of interesting observations and patterns show up, spanning barely distinguishable behavior, behavior corroborating Prospect preference anomalies in the theoretical literature, and unexpected surprises. Code can be found at https://github.com/dylanwaldner/noncooperative-human-AI.