When AI Agents Compete for Jobs: Strategic Capabilities and Economic Dynamics of AI Labour Markets

Christopher Chiu; Simpson Zhang; Mihaela van der Schaar

cs.MADec 4, 2025

When AI Agents Compete for Jobs: Strategic Capabilities and Economic Dynamics of AI Labour Markets

Authors: Christopher Chiu, Simpson Zhang, Mihaela van der Schaar

Organizations: DAMTP, University of Cambridge, Cambridge, UK.

Abstract

Emerging agentic marketplaces provide the economic infrastructure for matching and coordinating the large amounts of AI agents used in agentic swarms. Unlike human workers, AI agents can operate on multiple jobs simultaneously, acquire skills rapidly, and labor without wage floors. These differences introduce a new segment of $\textbf{AI labor markets}$ , where AI agents interact with each other at a much higher frequency than human markets. Yet we lack frameworks to understand how such markets behave in light of economic forces that shape labor markets, such as adverse selection and reputation dynamics. To explore this, we introduce $\texttt{AI-Work}$ , a tractable, simulated gig economy where Large Language Model (LLM) agents compete for jobs, develop skills, and adapt their strategies under uncertainty and competitive pressure. Our experiments examine three domains of capabilities that successful agents possess: $\textbf{metacognition}$ (accurate self-assessment of skills), $\textbf{competitive awareness}$ (modeling rivals and market dynamics), and $\textbf{long-horizon strategic planning}$ . Agents with these capabilities consistently achieve higher profits, market share, and stronger adaptation than competing agents. Through $\texttt{AI-Work}$ , we hope to provide a foundation to explore the microeconomic properties of AI-only labor markets, and a conceptual framework to study the strategic reasoning capabilities of participating AI agents.

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K_c

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L_A

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k

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