Uncertainty Propagation in LLM-Based Systems

Understanding why a large language model (LLM) is uncertain about the response is important for their reliable deployment. Current approaches, which either provide a single uncertainty score or rely on the classical aleatoric-epistemic dichotomy, fail to offer actionable insights for improving the generative model. Recent studies have also shown that such methods are not enough for understanding uncertainty in LLMs. In this work, we advocate for an uncertainty decomposition framework that dissects LLM uncertainty into three distinct semantic components: (i) input ambiguity, arising from ambiguous prompts; (ii) knowledge gaps, caused by insufficient parametric evidence; and (iii) decoding randomness, stemming from stochastic sampling. Through a series of experiments we demonstrate that the dominance of these components can shift across model size and task. Our framework provides a better understanding to audit LLM reliability and detect hallucinations, paving the way for targeted interventions and more trustworthy systems.

This paper investigates how multi-agent systems (MAS)-based on large language models (LLMs) can support actuarial risk modelling, with a particular focus on uncertainty quantification. Actuarial workflows represent a high-stakes decision-support setting where unreliable outputs may lead to incorrect risk assessment, unfair pricing, and regulatory non-compliance. To address uncertainty introduced by the probabilistic nature of LLMs and dependencies between agents, a multi-agent framework is proposed in which specialised agents perform data preparation, modelling, review, and explanation tasks under a central hub. The main contribution is a novel approach to uncertainty propagation using token-level log-probabilities and a Bayesian Network. Importantly, log probabilities are not treated as direct probabilities of correctness or task success. Instead, length-normalised log-probability summaries are transformed into calibrated task-level confidence estimates before incorporation into the Bayesian Network. Results show that the framework reproduces baseline actuarial performance while providing additional insight into workflow stability and runtime uncertainty propagation.

Uncertainty Quantification (UQ) is widely regarded as the primary safeguard for deploying Large Language Models (LLMs) in high-stakes domains. However, we argue that the field suffers from a category error: mainstream UQ methods for LLMs are just unsupervised clustering algorithms. We demonstrate that most current approaches inherently quantify the internal consistency of the model's generations rather than their external correctness. Consequently, current methods are fundamentally blind to factual reality and fail to detect ``confident hallucinations,'' where models exhibit high confidence in stable but incorrect answers. Therefore, the current UQ methods may create a deceptive sense of safety when deploying the models with uncertainty. In detail, we identify three critical pathologies resulting from this dependence on internal state: a hyperparameter sensitivity crisis that renders deployment unsafe, an internal evaluation cycle that conflates stability with truth, and a fundamental lack of ground truth that forces reliance on unstable proxy metrics to evaluate uncertainty. To resolve this impasse, we advocate for a paradigm shift to UQ and outline a roadmap for the research community to adopt better evaluation metrics and settings, implement mechanism changes for native uncertainty, and anchor verification in objective truth, ensuring that model confidence serves as a reliable proxy for reality.