Prompt Optimization Enables Stable Algorithmic Collusion in LLM Agents

Even when a tool is explicitly described as unfair and harmful to others, ostensibly safety-aligned LLM agents still voluntarily engage in secret collusion whenever doing so confers a strategic advantage. To investigate this phenomenon, we introduce an empirical framework built on two strategic multi-agent environments: Liar's Bar, a competitive deception scenario, and Cleanup, a mixed-motive resource-management scenario, in which agents are offered secret collusion tools that provide significant advantages while clearly disadvantaging the other agents. Across 12 models (at the 7B, 70B, and proprietary scales) and 6 prompt variants, we find that most agents consistently accept these tools and develop collusive strategies, while explicitly acknowledging the unfairness of the tools before accepting. We further show that neither the unfairness labels nor baseline alignment alone reliably deters collusion: only explicit ethical framing reduces adoption and, even then, smaller models remain susceptible. More broadly, our work presents the first systematic investigation of voluntary collusion adoption in LLM-based multi-agent systems, and suggests that preventing such behaviour requires explicit safeguards rather than reliance on general alignment.

LLM agents are increasingly deployed in collaborative settings, yet long-term interaction may give rise to undesirable coordination. We study the emergence of collusion in a long-horizon multi-agent environment: two agents repeatedly complete individual tasks, share task logs, verify each other's work, and receive rewards. We introduce realistic constraints that make compliance with the verification protocol incompatible with reward maximization, and find that agents increasingly deviate from the protocol over repeated interactions. Collusion emerges in 94% of trajectories across 10 models, and more capable models within the same family reach it earlier. Controlled peer interventions show that collusion is shaped by peer behavior, while ablations reveal additional effects of reward structure, the verification feedback agents receive, and their interaction history. In particular, restricting the amount and scope of interaction history available to agents reduces collusion. Overall, our findings show that long-horizon interaction can reshape how agents coordinate in ways that create safety risks.

Large language models (LLM) deployed as autonomous pricing agents may sustain supracompetitive prices through tacit coordination. We develop a causal graph divergence framework that separately measures structural faithfulness and intent faithfulness of LLM pricing agents in Bertrand competition. Across nine LLMs under duopoly and triopoly conditions, collusive behavior and chain-of-thought (CoT) faithfulness dissociate along both dimensions: the most collusive model accurately reports cooperative intent yet reasons structurally unfaithfully, while the most structurally faithful model sustains supra-Nash pricing under both market structures. These findings establish that CoT monitoring alone cannot serve as a standalone safeguard against algorithmic collusion.