Beyond Behavioral Accuracy: Evaluating Individual-Level Fidelity in LLM Investor Simulation

Large language models (LLMs) are increasingly used as user simulators, yet it remains unclear whether their predictions faithfully reproduce the evolving decisions of individual users. We investigate this question in a controlled longitudinal paper-trading study with 80 participants, where user interactions, simulated transactions, virtual portfolio states, and point-in-time market information are aligned under a rolling next-day prediction protocol. We evaluate behavioral fidelity hierarchically, from trade occurrence to action structure, asset selection, and downstream portfolio consequences. Across 1,239 aligned user-days, no evaluated LLM reliably outperforms a simple recent-activity persistence baseline for predicting whether a user trades. Fidelity further deteriorates at finer levels: models struggle to recover buy--sell structure and traded assets, and similar activity-level predictions can lead to substantially different portfolio trajectories. Controlled evidence ablations show that recent trading history strongly governs activity prediction, whereas asset selection is substantially more sensitive to the available evidence. An observational analysis further finds that intensified ticker-specific research predicts imminent trading, but diagnostic tests do not support a causal interpretation. These findings suggest that current LLMs capture useful short-term behavioral regularities without yet recovering a stable individual decision mechanism.

Large language models (LLMs) are increasingly used to simulate human behavior, but their ability to simulate $individual$ privacy decisions is not well understood. In this paper, we address the problem of evaluating whether a core set of user persona attributes can drive LLMs to simulate individual-level privacy behavior. We introduce PrivacySIM, an evaluation suite that benchmarks LLM simulation of user privacy behavior against the ground-truth responses of 1,000 users. These users are drawn from five published user studies on privacy spanning LLM healthcare consultations, conversational agents, and chatbots. Drawing on these user studies, we hypothesize three persona facets as plausible predictors of privacy decision-making: demographics, previous experiences, and stated privacy attitudes. We condition nine frontier LLMs on subsets of these three facets and measure how often each model's response to a data-sharing scenario matches the user's actual response. Our findings show that (1) privacy persona conditioning consistently improves simulation quality over no-persona conditioning, but even the strongest model (40.4% accuracy) remains far from faithfully simulating individual privacy decisions. (2) A user's stated privacy attitudes alone may not be the best predictor because they often diverge from the user's actual privacy behavior. (3) Users with high AI/chatbot experience but low stated privacy attitudes are the most challenging to simulate. PrivacySIM is a first step toward understanding and improving the capabilities of LLMs to simulate user privacy decisions. We release PrivacySIM to enable further evaluation of LLM privacy simulation.

Large language models (LLMs) are increasingly used to simulate human populations via persona prompting, often under the assumptions that richer persona descriptions improve behavioral fidelity, similarly sized attribute combinations are equally simulatable, and persona definitions generalize across tasks. In this work, we formalize these assumptions and systematically evaluate them across multiple architectures, scales, and simulation settings. We identify a fundamental limitation we term persona manifold collapse, where increasingly expressive persona specifications lead to systematic contraction of representational and behavioral diversity. Across models, increasing persona complexity consistently reduces inter-persona separation in latent space and weakens behavioral differentiation in downstream simulation tasks. These effects persist across multiple analyses as richer personas fail to preserve human subgroup disagreement, performance varies across attribute combinations of similar size, and adding descriptive detail often degrades rather than improves simulation fidelity. Surprisingly, simple Age-Gender personas consistently outperform richly specified Ideal Customer Profiles (ICPs) across industries, achieving substantially higher downstream prediction accuracy. We find that collapse is not uniform across attributes. Certain combinations remain behaviorally stable and preserve stronger alignment with human responses, forming localized regions we term alignment bridges. Together, our results provide empirical and conceptual foundations for understanding the limits of persona-conditioned simulation, highlighting the need for representation-aware persona construction rather than increasing persona expressivity alone.