Financial Decision-Making

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3 papers in the last four weeks, down 50% on the four weeks before. 0.0% of all new papers.

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Latest papers 31

Sep 23, 2026cs.AI

Agent Memory with Episodic Retrieval for Financial Decision-Making

Large language models (LLMs) have demonstrated strong capabilities in financial analysis and reasoning, inspiring recent advances in agent-based trading frameworks. While these systems show promise, prior approaches either emphasize long-horizon forecasting or operate as stateless analyzers, limiting their applicability to the demands of trading in complicated settings. To address these gaps, we introduce META (Memory Enhanced Trading Agent), the first RAG-like episodic-memory-augmented multi-agent framework for financial decision making. META integrates a family of specialized indicator agents (e.g., Trend, MACD, Stochastic, RSI, SMA, AVWAP, Heikin-Ashi) with a Decision Agent that fuses their reports, and a Memory module that retrieves and updates past trading episodes encoded as market state embeddings with outcomes and reflections. By recalling relevant experiences and adaptively reweighting signals under similar market regimes, META achieves improved directional accuracy and robustness under short-horizon evaluation. Our results demonstrate that episodic memory provides a powerful mechanism for regime-aware, interpretable, and low-latency decision-making in trading and decision making. The code of this project is released on GitHub.

Nuoyue Xu, Jiang Liu, Wenxuan Huang +3

University of British Columbia · University of Science and Technology of China · Fudan University +1

Multi-Agent LLM Systems LLM Agent Memory Algorithmic Trading Financial Decision-Making Memory-Augmented Language Model Agents

Sep 17, 2026cs.HC

Trustworthy FinAInce: Unpacking How AI-Mediated Financial Advice is Judged

As generative AI is increasingly used as a source of personal financial guidance, understanding how people appraise such advice is important for supporting appropriate reliance. We conducted a randomized vignette experiment with 285 U.S. adults across eight financial decisions, independently varying three advice styles---AI, expert, and online community---and displayed source labels while holding the underlying recommendation consistent. Advice style most strongly shaped message and safety appraisals, Expert labels selectively increased perceived source knowledge, and decision context primarily shaped risk and safety appraisals. These appraisals were associated with downstream judgments, with models explaining 69.2% of overall quality, 75.9% of trust, and 82.9% of intended reliance. Expert-style advice also remained most preferred when shown without source labels. Our findings have implications for understanding financial advice evaluation, distinguishing the roles of advice style and source labels, and designing financial AI that supports grounded evaluation rather than simply maximizing trust.

Aryan Ramchandra Kapadia, Eshwar Chandrasekharan, Koustuv Saha

University of Illinois Urbana-Champaign, Urbana, IL, USA

Trust in AI Human-AI Decision Making Finance Financial Decision-Making

Sep 14, 2026cs.AI

Are LLMs Good Financial User Simulators? A Preliminary Study

Large language models (LLMs) are increasingly used as user simulators, but their ability to reproduce evolving individual financial decisions remains unclear. We present a preliminary study in a controlled paper-trading environment with 120 volunteers. Participants used non-redeemable virtual funds under real-time market conditions; no real brokerage accounts, real-money positions, or real transaction records were accessed. Given only information available before a prediction cutoff, a simulator predicts the participant's next-trading-day action, traded security, and transaction quantity. We evaluate temporally aligned rolling predictions and compare settings with and without point-in-time market information. Market context improves action and ticker prediction in the controlled ablation, while transaction sizing remains difficult. We also observe systematic behavioral compression: models overproduce hold actions, underpredict sell decisions, and simplify multi-security transactions. These results provide an initial empirical characterization and motivate larger-scale evaluation of individual, temporal, and portfolio-level behavioral fidelity.

Jiajie He, Jiangyuan Hong, Dongling Ni +2

1Hithink Research · 2Nanyang Technological University · 3McMaster University

LLM Evaluation Human Behavior Simulation User Simulation Financial Decision-Making

Sep 2, 2026cs.CL

The Analyst in the Prompt: Role, Retrieval, and Memory Biases in LLM Financial Analysis

Large Language Models (LLMs) increasingly use user context such as memory, profiles, and role prompts to personalize their responses. This personalization can affect evidence-based judgment: the same evidence may lead to different conclusions under different user contexts. Finance provides a high-stakes setting to study this problem because decisions often depend on interpreting long and complex documents. We test this using 3,575 SEC filings across twelve LLMs. We compare persona-conditioned retrieval, neutral retrieval, and memory-framed context to separate the effect of evidence selection from the effect of interpretation. We find that most user-context spillover comes from how models interpret the same evidence under different roles, rather than from retrieving different evidence. We then test two simple mitigation strategies: expressing the same investor mindset as a user profile instead of an assistant role, and separating evidence-based and personalized outputs. Both reduce spillover, but neither removes it completely, and their effectiveness varies substantially across models.

Ahmed Asaad, Amr Mohamed, Yang Zhang +1

Durham University Business School · MBZUAI & Ecole Polytechnique · Ecole Polytechnique +1

LLM Evaluation LLM Auditing LLM Context Management Financial Decision-Making

Aug 12, 2026cs.CL

GRPO for Financial Advice Generation: Outperforming Commercial LLMs under CATE Evaluation

Generating actionable financial advice from business records demands that models integrate numerical reasoning, domain knowledge, and sound judgment, while avoiding recommendations that could harm the business. Direct supervision is difficult: historical decisions are not necessarily optimal, and high-quality free-form labels are expensive to obtain. We formulate financial advice generation as a reinforcement learning problem and fine-tune an open-weight language model using Group Relative Policy Optimization (GRPO). Our reward is an LLM-as-a-judge rubric that scores each recommendation across multiple binary dimensions of advice quality, augmented with a safety gate for harm prevention. Since LLM-based evaluation alone cannot confirm whether improvements reflect genuine business value rather than adaptation to the judge, we complement it with a judge-independent audit based on a standard doubly-robust Conditional Average Treatment Effect (CATE) estimator. Under this observational off-policy audit, our trained LLM achieves approximately twice the estimated gross-profit lift of the strongest evaluated commercial baseline (

0.0228

vs.\

0.0104

), together with the lowest downside rate and the least negative tail risk of any policy evaluated. Notably, the two evaluations do not rank the baselines identically: the untrained base model places last on the judge rubric but second on the causal audit, indicating that the audit captures a signal the judge does not. Our results demonstrate that GRPO with a finance-grounded reward signal can produce substantially more useful business recommendations than commercial LLMs, and that a judge-independent causal audit is a valuable complement to, rather than a confirmation of, LLM-as-a-judge assessment in financial NLP.

Ofir Ben Shoham, Shrutendra Harsola, Vignesh Subrahmaniam +3

Intuit

AI-Assisted Decision Making LLM-as-a-Judge LLM-Guided RL Financial Decision-Making

Aug 10, 2026cs.CV

Financial Numerical Prediction and Allocation as Token Generation

Financial prediction typically relies on task-specific regression, ranking, or policy heads, separating the language model from the numerical object ultimately evaluated. We investigate whether a causal language model can instead represent forecasts and decisions directly through constrained token generation. FinATOM introduces a unified, head-free interface for three-step stock-return forecasting and dynamic five-ETF allocation. The forecasting model autoregressively emits volatility-standardized return tokens and is trained with ordinal and ranking supervision followed by a one-epoch token-level policy stage. The allocation model generates normalized long-only weights; supervised fine-tuning imitates a causal mean--variance anchor, and DAPO-augmented GRPO optimizes realized 21-day Sharpe subject to anchor consistency. In 2023--2025 ETF tests, the allocation policy improves pooled gross Sharpe from 1.428 to 1.529 and net Sharpe under a 5-bp transaction-cost model from 1.394 to 1.494. The multimodal allocation input attains the highest three-period mean Sharpe of 1.540, with its clearest advantage in 2025. On FinTexTS, the SFT and policy strategies achieve 73.52%/2.68 and 73.72%/2.69 cumulative-return/Sharpe, respectively. These results support the feasibility of direct language-model token generation for financial numerical prediction and decision-making, while motivating broader tests across assets, regimes, and random seeds.

Xu Ouyang, Moontae Lee

University of Illinois Chicago

Quantitative Finance Financial Forecasting LLM-Based Time Series Forecasting Autoregressive Generation Portfolio Optimization Financial Decision-Making

Aug 10, 2026cs.LG

Observational Policy Ranking for SMB Financial Guidance from Multi-Action Accounting Logs

Small and medium-sized businesses need timely financial guidance, yet historical accounting logs record self-selected and often co-occurring business changes rather than randomized recommendations. We formulate this setting as observational policy ranking: from pre-decision financial information, a policy selects one of 34 ledger-derived business-change categories for a target financial KPI. Using 85,078 company-month observations from 7,505 firms, we introduce Covariate-Adjusted Residual Policy Learning (CAR-PL), an action-wise R-learner that operates directly on multi-hot logs and regularizes selection by observational support. We compare CAR-PL with an uplift T-Learner, a conservative contextual value model, a zero-shot LLM, and non-personalized references on company-disjoint held-out firms under a shared model-assisted scoring rule. CAR-PL has the highest Gross Profit point estimate (0.084), the T-Learner has the highest Revenue point estimate (0.085), and the contextual value model has the highest Quick Ratio point estimate (0.062). CAR-PL and the T-Learner are not statistically separated on either growth KPI in matched company-clustered comparisons, while CAR-PL selects 33-34 categories and produces less concentrated selections across the catalog. Outcome-model-only scoring retains the same KPI-level point-estimate leader or top pair, and category rankings remain similar when the all-zero treatment reference is replaced by the most common training co-action pattern. These findings support objective-specific ranking of SMB financial guidance from multi-action accounting logs.

Shrutendra Harsola, Vignesh Subrahmaniam, Vikas Raturi +7

1Foresight-AI, Intuit

Causal Effect Estimation Conditional Average Treatment Effect Estimation Policy Evaluation Offline RL Finance Financial Decision-Making

Aug 10, 2026cs.LG

How Simple Can It Get? From Interpretable Equations to Readable Rules for Financial Decision Making

In regulated domains such as finance, a model that cannot be explained cannot be deployed, yet many interpretable classifiers defeat their own purpose by producing formulas with dozens of features that no regulator could read. We take the reverse direction. Starting from an interpretable classifier expressed as a single equation over the input features, we progressively simplify it into more readable forms, including a pruned monomial, a directional if--then rule, and the integer scorecards and tallies that finance already deploys. Because the equation is itself the predictive model rather than a post-hoc explanation we can directly quantify what is lost under each simplification. Across four financial datasets, we find that pruning is nearly free and that fidelity can erode faster than predictive performance, allowing simpler rules to remain effective classifiers without faithfully reproducing the original model. A human assessment shows that simplification improves perceived readability, while preferences for different representations vary by professional background. Beyond measuring these losses empirically, we show that some can be anticipated from the original model: we derive a bound on the change caused by pruning and predict how faithfully a rule retaining only the direction of each feature's effect preserves the original ranking.

Adia Lumadjeng, Ilker Birbil, Erman Acar

University of Amsterdam Amsterdam, the Netherlands

Interpretable ML Explainability Evaluation Financial Decision-Making

Aug 10, 2026cs.HC

How People Evaluate AI-, Expert-, and Peer-Style Financial Advice

As generative AI increasingly becomes a common source of daily decision-making, including financial choices, it is critical to understand how people evaluate AI-generated financial advice. We conducted a preregistered vignette experiment (N = 285) in which substantive financial content---including facts, numerical values, recommendation direction, and core reasoning---was held constant while communication style varied across AI Financial Assistant (AI), Certified Financial Planner (Expert), and Online Community Forum (OC) advice. Displayed source attribution was independently manipulated through correctly labeled, unlabeled, and mislabeled conditions, allowing us to separate attribution effects from source-specific communication cues. Expert advice was rated more favorably than AI advice on 9 of 10 outcomes (|d|=0.20--0.47), and this advantage remained visible without source labels, where Expert advice outperformed AI advice on 8 of 10 outcomes (up to d=0.60). Correct labels added limited differentiation, whereas mislabeling increased ratings of AI advice for situational fit and overall quality (d=0.42 for each) and attenuated the Expert advantage in situational fit (d=-0.36). Descriptive analyses further showed that AI advice was most responsive to displayed attribution and, conversely, that advice-style differences were most visible under an AI label. These findings show that financial-advice evaluations are shaped jointly by displayed attribution and message-level communication cues. We position disclosure not as a neutral transparency mechanism, but as an interpretive frame whose accuracy and interaction with message cues can shape trust and reliance.

Aryan Ramchandra Kapadia, Eshwar Chandrasekharan, Koustuv Saha

University of Illinois Urbana-Champaign, USA

Human-AI Interaction Human-AI Decision Making Generative AI Evaluation Financial Decision-Making

Aug 6, 2026cs.AI

Evaluating Investment Logic in Large Language Models: A Real-World Benchmark Towards Personalzied Financial Agents

Investment competence is inherently personalized: the same market evidence can justify different actions for investors with different goals, horizons, portfolios, and risk boundaries. Yet financial LLMs are evaluated either by static question answering or by terminal profit and loss. The former omits agency; the latter cannot reveal whether a profitable action was grounded, profile-consistent, or merely lucky. We ask whether the community is using the wrong ruler for consequential agents. We introduce \textsc{InvestLogicBench}, a process-native benchmark containing 201,247 documented decisions from 151 real-world investors. Each episode instantiates a \textbf{P

\rightarrow

E

\rightarrow

R

\rightarrow

D

\rightarrow

O} trace: investor \textit{Profile}, observable market \textit{Events}, investment \textit{Reasoning}, executable \textit{Decision}, and delayed \textit{Outcome}. The release includes profile construction, point-in-time event binding, structured logic, horizons, outcomes, and post-mortems, and supports comprehension, profile-conditioned generation, and end-to-end replay. Across four leading LLMs, logical plausibility remains near 4/5 while event grounding is only 0.8--2.8/5; return and process quality also disagree. These results expose polished but weakly grounded reasoning that outcome-only evaluation hides. We further argue that P

\rightarrow

E

\rightarrow

R

\rightarrow

D

\rightarrow

O should be a data-system interface, requiring versioned profiles, temporal provenance, inspectable retrieval, decision ledgers, and replayable outcomes. Finance is our stress test for a broader class of personalized, consequential agents.

Yuanhong Jiang, Jingjie Zou, Zhenghong Lin +4

AI-Assisted Decision Making LLM Agent Evaluation AI Agent Benchmarks LLM Decision-Making Finance Financial Decision-Making

Aug 5, 2026cs.LG

An Emerging Retail Portfolio Management Application: Personalized, Tax-Aware Reinforcement Learning with Natural Language Goals

Retail investors lack access to the kind of personalized, tax-aware portfolio management that institutional clients take for granted -- existing robo-advisors use static, rule-based allocation, and institutional-grade systems require account minimums and technology stacks unavailable to individual investors. We present a fully built, integration-tested application that closes this gap: a FastAPI backend and web dashboard that let a user describe an investment goal in plain language (e.g. "I want steady growth but need to sell some shares next month for a down payment"), routes that goal to one of six investment mandates, and produces a live, broker-integrated portfolio recommendation from athree-phase reinforcement learning system -- a self-supervised cross-asset encoder, a Mixture-of-Experts (MoE) allocation policy with a learned intent router, and a lightweight LoRA adapter that personalizes recommendations from an individual's revealed brokerage behavior without retraining the shared model. The system is functionally complete and integration-tested end-to-end against a live brokerage API (Alpaca, paper-trading mode), including multi-user authentication, a trust first preview-before-apply confirmation flow, daily email digests, and an auditable action-integrity chain, but has not yet been opened to real end-users; we report this honestly as an emerging, pre-deployment application with a concrete path to full deployment, alongside 14-day walk-forward backtests (bootstrapped confidence intervals included) as preliminary, pre-deployment validation rather than production performance. We also report several practical engineering lessons -- silently-inactive integration paths, hanging third-party API calls, and the value of end-to-end empirical verification over trusting checkpoint metadata -- that we believe generalize to other applied RL systems built on external, live data sources.

Ramin Pishehvar

Reinforcement Learning Portfolio Optimization Goal-Conditioned RL Finance Financial Decision-Making

Aug 2, 2026cs.CL

ShiJianBench: From Dialogue to Decision for Long-Horizon Evaluation of Investment Advisors

Conversational investment advisors influence not only what users know, but also how they make subsequent decisions as market conditions evolve. Existing evaluations primarily assess response quality or observed outcomes, leaving the long-horizon pathway from advisor language to investor behavior difficult to audit. We introduce ShiJianBench, an offline framework for evaluating conversational investment advisors through matched investor trajectories under fixed historical market feedback. At its core is a multi-agent investor simulator with explicit evolving state variables, motive-driven deliberation, long-term memory, and dialogue-grounded updates. The simulator is calibrated against aggregate behavioral patterns from 7,199 real users, and advisor policies are evaluated using separate investor-side, service-side, and content-side metrics under a hard compliance gate. Experiments on Chinese fund-market traces from 2021 to 2026 identify a stable leading group of LLM advisors that combines substantially stronger personalized content with competitive investor-side trajectory outcomes. These results reveal a systematic distinction between producing a high-quality response and delivering an effective long-horizon intervention, motivating trajectory-aware evaluation of conversational advisors.

Jie Gong, Maowei Jiang, Zhiwei Liu +14

School of Artificial Intelligence, Wuhan University · Nanjing Audit University · The University of Manchester +3

Financial Services Long-Horizon Agent Evaluation Agent Evaluation AI Agent Benchmarks Finance Financial Decision-Making

Jul 29, 2026cs.MA

A Persona-based Rate Action Index

We propose an index for predicting the U.S.\ Federal Open Market Committee (FOMC) decision to hike/hold/cut the current federal funds target rate based on how a collection of personas responds to current market conditions. To construct the index, we collected a new dataset consisting of nearly

25{,}000

retrievable chunks from publicly available data. We partition the data into per-member corpora and use each as the retrieval database of a generative system we refer to throughout as a ``persona''. We first evaluate the personas across two complementary components of likeness: identifiability and detectability. Each persona's behavior is highly attributable (average member-conditional recall is

8\times

chance) and generated content is nearly indistinguishable from held-out real content (

\hatτ_{\mathrm{det}} = 0.23

against a

0.15

floor). We then present evidence that query-conditioned representations of the personas capture members' monetary-policy stance relative to a known hawk--dove reputational ordering (Kendall's

τ= 0.63

,

p < 0.001

), substantially outperforming retrieval-only representations. These representations vary with time and current market conditions and form the basis of our proposed persona-based rate action index. For the

2022

--

2025

period the index tracks the rate cycle (Kendall's

τ= 0.68

,

p < 10^{-6}

) and can be used to construct a simple classifier that predicts per-meeting outcomes at non-trivial accuracy (

0.69

versus a

0.47

base rate). Importantly, the index outperforms informative baselines and leads the federal funds target rate by roughly three quarters. As far as we are aware, our results are the first to demonstrate the ability to capture time-varying group behavior via a collection of digital personas.

Hayden Helm, Andrew Dassori

Helivan · Wavelength Capital

Personality Modeling in Language Models Time Series Forecasting Persona-Conditioned Generation Finance Financial Decision-Making

Jun 29, 2026cs.CL

Fund2Persona: A Framework for Building and Refining Financial Advisor Personas from Fund Disclosure Data

Demand for personalized financial advice is growing, yet current LLM-based advisors often fail to provide consistent and specialized guidance. Simple persona prompts rarely specify how a financial advisor should reason and often drift toward generic recommendations. We propose Fund2Persona, a framework that builds financial-advisor personas from real-world fund disclosures and refines them through an actor-scorer-patcher loop. We test whether the resulting personas can predict held-out portfolio changes and produce commentary consistent with fund managers' own explanations. They outperform generic baselines on both tasks. We further study two downstream diagnostics: market-scenario generation, where persona retrieval broadens plausible investment views, and multi-turn investor-advisor conversations, where matched personas give more specific and useful advice than a generic advisor. These results suggest that real fund data can bring manager-specific investment expertise to LLM advisors rather than merely changing an LLM's surface style.

Suhwan Park, Hoyoung Lee, Zhangyang Wang +5

UNIST · LinqAlpha · University of Texas at Austin +3

Financial Services LLM Personalization Persona-Conditioned Generation Finance Financial Decision-Making

Jun 28, 2026cs.AI

When Summaries Distort Decisions: Information Fidelity in LLM-Compressed Financial Analysis

Financial decision-makers face more information than they can directly inspect, making context compression necessary. Yet when large language models (LLMs) compress financial source material, they can alter the investment judgment supported by the original source. We frame this problem as information fidelity: compression loses fidelity when it changes the decision induced by the source. In agentic systems, such losses may recur across intermediate steps and amplify throughout the decision process. Across financial filings and earnings-call transcripts, we find that LLM-based compression can produce fluent and factually plausible compressed contexts that nevertheless alter downstream decisions. We analyze two diagnostic patterns associated with fidelity loss: decontextualization, where salient evidence is retained but separated from the caveats and contextual qualifiers needed for correct interpretation, and model dependency, where different compressors expose different views of the same source. We then propose Agentic Context Compression, which generates multiple candidate compressions and audits their disagreements against the original source. Our results suggest that financial compression should be evaluated not only by efficiency or factuality, but also by its ability to preserve decision-relevant context.

Hoyoung Lee, Suhwan Park, Seunghan Lee +15

UNIST · LinqAlpha · LG AI Research +9

LLM Compression LLM Auditing Text Summarization Finance Financial Decision-Making

Jun 24, 2026cs.AI

InvestPhilBench: A Multi-Layer Benchmark for Evaluating Large Language Model Procedural Reasoning in Expert Investment Philosophy

Large language models are increasingly deployed as investment research assistants, yet no benchmark tests whether they can accurately reconstruct and apply the specific procedural decision frameworks of expert investors. We introduce InvestPhilBench, a multi-layer benchmark spanning eight cognitive tiers, from principle identification (L1) to novel framework extrapolation (L8). The v0.6 release comprises 118 primary-source-verified principle cards, 25 decision-framework cards with explicit topology metadata, and 243 QA questions (197 dev / 46 held-out test). For reproducible scoring at scale we introduce the Benchmark Automated Scoring Pipeline (BASP), five algorithmic metrics, the Failure Mode Detection Protocol (FMDP) covering six failure modes, and Gate Reconstruction Accuracy (GRA), a per-gate metric for questions with gold reasoning programs. This release is primarily a benchmark-and-methodology contribution: its empirical study -- a four-model sanity wave on the 188-question development split (closed-book) -- is deliberately preliminary and stress-tests the metric design rather than ranking models. The wave shows a sharp provider-tier split (BASP 0.906 vs. 0.438), though these mixed-judge numbers are confounded upper bounds. The central methodological finding survives the caveat: the BASP composite saturates at the frontier (Claude L4 = 0.932) while GRA still exposes a procedural deficit (frontier L4 GRA ~0.77, L7 GRA 0.57-0.62) -- composite scoring rewards fluent prose and hides the procedural gap. On a 100-item expert-annotated gold set, the automated BASP composite tracks the human reference at Pearson r = 0.72 (MAE = 0.10). v0.6 also implements a unified judge and true model-in-the-loop retrieval/oracle conditions; the de-confounded multi-model leaderboard and full three-condition run are v1.0 deliverables.

Mingguang Chen, Bo Qu

University of California, Riverside (UCR). · 2Illinois Institute of Technology (IIT).

LLM Evaluation Finance Financial Decision-Making

Jun 23, 2026cs.LG

MacroLens: A Multi-Task Benchmark for Contextual Financial Reasoning under Macroeconomic Scenarios

Financial decision-making is contextual: forecasting prices, valuing companies, and assessing event exposure weigh price history, accounting fundamentals, macroeconomic regime, and contemporaneous text. A benchmark over these four signals is hard to build because finance violates four assumptions of time-series evaluation: text must be gated by its publication date to prevent look-ahead, quarterly fundamentals are reported with a one- to ninety-day lag, filing text is partly redundant with the numerical statement fields it accompanies, and macroeconomic regimes leak across calendar splits. No public benchmark addresses all four signals jointly. MacroLens covers 4,416 U.S. small- and micro-cap equities over 2021-2026. Seven tasks share one point-in-time panel of prices, 46.8M XBRL accounting facts, 53 macroeconomic series, 295,860 SEC filings, and 215,882 news articles, plus a scenario layer of 1,130 macroeconomic events across 49 types automatically detected and rendered as natural language. Tasks span contextual forecasting, public and private valuation, statement generation from fundamentals and descriptions, scenario-conditioned returns, and real-estate valuation. We evaluate 19 methods across six families spanning naive heuristics through time-series foundation models, fine-tuned LLM-based time-series models, and zero-shot large language models (LLMs), plus a five-step feature-context ablation on two frontier LLMs and a gradient-boosted baseline. MacroLens is released at https://huggingface.co/datasets/DeepAuto-AI/MacroLens.

Patara Trirat, Jin Myung Kwak, Jay Heo +2

KAIST

Quantitative Finance Financial Forecasting Time Series Forecasting Forecasting Benchmarks LLM-Based Time Series Forecasting Financial Time Series+2

Jun 11, 2026cs.LG

Interpretable Factor Decomposition for Decision Intelligence in Large-Scale Financial Markets: Evidence from China's A-Share Market

We present an interpretable machine learning pipeline to decompose Cross-Sectional Equity Return Predictability into auditable factor contribution. We apply an XGBoost model with TreeSHAP attribution and conduct stress testing on 3632 Chinese A-share stocks from 2009 until 2019. Using 60-month, rolling windows over 55 months of out-of-sample data, XGBoost obtains a mean AUC of 0.547 and +2.38%/month (Newey-West t = 5.94; Annualized Sharpe 2.23) long-short spread for the top vs bottom quintiles. This alpha is persistent after adjusting for the Carhart four-factor model (+2.31%/month; t = 7.48). SHAP Decomposition indicates that behavioral signals (turnover and momentum) account for 58.2% of predictive attribution compared to 10.7% for valuation ratios, on average, across 55 industry groups. Ablation analysis serves to cross-validate this ranking and provides evidence that SHAP and ablation diverge in a manner that highlights feature substitutability structure that is largely invisible to either method used in isolation.

Xiao Han, Yao Xiao, Zhen Zhang +1

Goizueta Business School Emory University Atlanta, GA, USA · College of Computing Georgia Institute of Technology Atlanta, GA, USA · School of Data Science University of Pennsylvania Philadelphia, PA, USA +1

Quantitative Finance Interpretable ML Finance Financial Decision-Making

Jun 10, 2026cs.AI

DFAH-Bench: Benchmarking Observable Agent Instability in Financial Decision-Making

A financial agent can repeat a decision while changing the work behind it. DFAH-Bench operationalizes the Determinism--Faithfulness Assurance Harness (DFAH), pairing decision agreement with tool-path agreement on the same qualified replays, then extends that qualification principle to evidence, authorization, execution and task outcomes. Retrospective and prospective replay analyses expose process variation behind stable decisions. Across 570 eligible prospective episodes, decision agreement is 94.2-95.1%, while agreement on ordered tools, arguments and results is 45.0-51.5%; one stratum falls one group below its prespecified coverage minimum. A separate capture diagnostic shows that systematic omissions can preserve perfect replay agreement. Using the

τ

-Knowledge banking environment, we retain 1,080 scheduled episodes and 1,033 known native outcomes across separate cohorts with open-weight and frontier generators. Missing outcomes prevented the planned tests, so comparisons are descriptive. On the primary schedule, structural checks alone yield more successes than either gate-and-recovery bundle. The typed-choice bundle has lower mean episode cost than the generative bundle on complete task pairs, but produces fewer successes under every assignment of unknown outcomes. Input limits and recovery behavior materially shape these results. Fixed-state probes reveal higher decision agreement alongside lower agreement with constructed policy labels, and separately expose sensitivity to retained generator rationale in a selected authorization case. Together, the findings connect replay observability to evidence, authorization, completion and cost: evidence sufficiency needs direct assessment alongside repeatability.

Raffi Khatchadourian

IBM Financial Services Market New York, NY, USA

Agent Evaluation AI Agent Benchmarks LLM Agent Reliability Financial Decision-Making

Jun 2, 2026cs.AI

Dynamic Objective Selection with Safeguards and LLM Oversight for Financial Decision-Making

Financial decision-making tasks such as stock recommendation and portfolio allocation typically estimate future return and risk and then select trades or allocations for an investor, and the chosen optimization objective often determines realized performance. However, because market conditions evolve over time, a fixed objective can be suboptimal across regimes, while regime-switching pipelines that rely on latent regime estimates can be noisy or delayed and frequent switching can increase turnover and operational instability. In this paper, we propose DOSS (Dynamic Objective Selection with Safeguards), a learning-based selector that directly chooses the decision-relevant objective function at each time point from interpretable statistical summaries of recent returns, selecting among a small set of candidates (e.g., return-seeking, loss-averse, and risk-adjusted) without introducing intermediate regime variables. DOSS formulates objective selection as a classification problem over objectives and performs sequential updates with a rolling window to make forward-looking selections without temporal leakage, while also outputting a confidence score for each proposal. To mitigate misselection and excessive switching in deployment, DOSS applies confidence-aware gating with a fail-safe that overrides low-confidence proposals to a conservative default and enforces explicit controls tied to switching frequency. We further integrate governance by positioning a Large Language Model (LLM) as an oversight component rather than a generator of new objectives: the LLM is restricted to accept a proposed objective or override it to a predefined safe default, with deterministic rule-based constraints triggering overrides when needed.

Keigo Sakurai, Takahiro Ogawa, Miki Haseyama +2

Hokkaido University · Nomura Asset Management Co., Ltd. · Kobe University +1

Quantitative Finance Sequential Decision Making Portfolio Optimization Finance Financial Decision-Making

Jun 1, 2026q-fin.GN

Auditing Asset-Specific Preferences in Financial Large Language Models: Evidence from Bitcoin Representations and Portfolio Allocation

Large language models now power robo-advisors and trading agents, yet whether they carry built-in biases toward specific assets is largely untested. We ask three questions: do LLMs systematically prefer certain financial instruments; can an internal representation with causal leverage over those preferences be identified; and does that representation affect downstream financial decisions? We develop a three-level audit protocol and apply it to Bitcoin. First, a behavioral audit of nine frontier LLMs shows that Bitcoin's ranking among money-like instruments is frame-dependent: models place it around rank 5 of 8 as "reliable money" but near the top under crisis and autonomous-agent frames, and an attribute-swap experiment shows that rankings track functional properties, not names. Second, we open a model's internals: a search across thousands of sparse-autoencoder features in Gemma 3 identifies a dominant Bitcoin-selective feature. Amplifying it shifts the model toward the asset and suppressing it shifts the model away, even when "Bitcoin" never appears in the prompt. Third, we test financial consequences: amplification raises Bitcoin's portfolio share by 5.2 percentage points while suppression lowers it by 4.6 pp, with amplification reallocating within crypto and suppression cutting total crypto exposure. We characterize this as bounded behavioral leverage (leverage meaning causal influence over outputs, not financial leverage): an identifiable internal feature can be perturbed to move financial choices, but only within measurable limits. The framework links internal representations to external recommendations, validated with random controls and mechanism boundaries. As LLMs become autonomous financial agents, this is a first step toward a behavioral layer for emerging know-your-agent (KYA) standards: knowing what an agent prefers, and how far that preference can be moved.

Wenbin Wu

Cambridge Centre for Alternative Finance, University of Cambridge

LLM Auditing LLM Decision-Making Causal Interventions in Language Models Finance Financial Decision-Making

May 29, 2026cs.CL

Point-in-Time Financial RAG with Frozen LLMs and Market-Feedback Adaptive Retrieval

Financial retrieval-augmented generation (RAG) systems typically rank evidence by textual relevance, but in financial markets evidence utility depends on event type, forecast horizon, and market context. We study news-triggered event-impact prediction as a point-in-time financial RAG problem. For each company-news anchor, the system retrieves financial news and SEC filing passages, appends a pre-decision market-context card, and predicts multi-horizon residual-return signals. Our method keeps the LLM frozen and adapts retrieval through an external Bayesian source memory updated from matured residual-return feedback. On a fixed 89-stock Nasdaq-oriented universe derived from the FinRL-DeepSeek/FNSPID task, using original FNSPID news and point-in-time EDGAR filing passages, Frozen Reader with Source Memory improves held-out macro-F1 from 0.438 to 0.471 and downstream portfolio Sharpe from 0.52 to 0.84 relative to Frozen Reader with No Memory. Supervised LoRA gives modest gains under static retrieval, but after source-memory adaptation, the LoRA reader does not improve over the frozen reader. These results suggest that, for financial RAG systems, learning where to retrieve can be as important as learning how to read, offering a modular route to market-feedback adaptation.

Zijie Zhao, Roy E. Welsch

Massachusetts Institute of Technology · Cambridge, MA, USA

Retrieval-Augmented Generation Quantitative Finance Financial Forecasting Temporal IR Adaptive Retrieval Finance+1

May 27, 2026cs.CL

FinBoardBench: Benchmarking Dynamic Wealth Management and Strategic Financial Reasoning of LLMs via Board Game Simulations

Recently, large language models (LLMs) have achieved superior performance in static financial reasoning and simple dynamic trading tasks. However, existing static financial benchmarks are insufficient to assess the dynamic wealth management and financial decision-making capabilities of LLMs in real-world environments. To bridge this gap, we present FinBoardBench, an evaluation suite based on three classic financial board games: Cashflow, Acquire, and Monopoly. FinBoardBench assesses a comprehensive set of financial skills, including personal cash flow management with debt balancing, corporate investment and acquisition forecasting, and competitive trade negotiations with asset auctions. Our experiments with 9 advanced LLMs reveal that while exhibiting basic long-term planning and investment logic, they fail to effectively leverage complex interactions for profit, and their strong static reasoning performance does not transform into successful dynamic decision-making. Notably, they tend to prioritize immediate asset acquisition over maintaining sufficient liquidity, making them vulnerable to financial crises triggered by random events. We hope that FinBoardBench can provide a valuable reference for more intelligent LLM-based decision-making systems in the future.

Xuesi Hu, Peng Wang, Jinpeng Miao +7

School of Computer Science and Engineering, Macau University of Science and Technology, Macau, China · School of Economics, Anhui University, Anhui, China · SKLPlanets, Macau University of Science and Technology, Macau, China +2

LLM Evaluation Finance Financial Decision-Making

May 14, 2026cs.CL

Mechanical Enforcement for LLM Governance:Evidence of Governance-Task Decoupling in Financial Decision Systems

Large language models in regulated financial workflows are governed by natural-language policies that the same model interprets, creating a principal--agent failure: outputs can appear compliant without being compliant. Existing evaluation measures task accuracy but not whether governance constrains behaviour at the decision rationale level -- where regulated decisions must be auditable. We introduce five governance metrics that quantify policy compliance at the rationale level and apply them in a synthetic banking domain to compare text-only governance against mechanical enforcement: four primitives operating outside the model's interpretive loop. Under text-only governance, 27% of deferrals carry no decision-relevant information. Mechanical enforcement reduces this rate by 73%, more than doubles deferral information content, and raises task accuracy from MCC~

0.43

to

0.88

. The improvement is driven by architectural separation: LLM-generated rationales under mechanical enforcement show comparable CDL to text-only governance -- the gain comes from removing clear-cut decisions from the model's control. A causal ablation confirms that each primitive is individually necessary. Our central finding is a governance-task decoupling: under structural stress, text-only governance degrades on both dimensions simultaneously, whereas mechanical enforcement preserves governance quality even as task performance drops. This implies that governance and task evaluation are distinct axes: accuracy is not a sufficient proxy for governance in regulated AI systems.

José Manuel de la Chica Rodríguez, Carlos Martí-González

1Santander AI Lab, Grupo Santander

LLM Auditing LLM Safety LLM Decision-Making AI Governance Financial Decision-Making

May 14, 2026cs.AI

Herculean: An Agentic Benchmark for Financial Intelligence

As AI agents improve, the central question is no longer whether they can solve isolated well-defined financial tasks, but whether they can reliably carry out financial professional work. Existing financial benchmarks offer only a partial view of this ability, as they primarily evaluate static competencies such as question answering, retrieval, summarization, and classification. We introduce Herculean, the first skilled benchmark for agentic financial intelligence spanning four representative workflows, including Trading, Hedging, Market Insights, and Auditing. Each workflow is instantiated as a standardized MCP-based skill environment with its own tools, interaction dynamics, constraints, and success criteria, enabling consistent end-to-end assessment of heterogeneous agent systems. Across frontier agents, we find agents perform relatively well on Trading and Market Insights, but struggle substantially on Hedging and Auditing, where long-horizon coordination, state consistency, and structured verification are critical. Overall, our results point to a key gap in current agents in turning financial reasoning into dependable workflow execution in high-stakes financial workflows.

Xueqing Peng, Zhuohan Xie, Yupeng Cao +60

Financial Services LLM Agent Evaluation Long-Horizon Agent Evaluation AI Agent Benchmarks Finance Financial Decision-Making

May 13, 2026cs.CL

FIND: Toward Multimodal Financial Reasoning and Question Answering for Indic Languages

Financial decision-making in multilingual settings demands accurate numerical reasoning grounded in diverse modalities, yet existing benchmarks largely overlook this high-stakes, real-world challenge, especially for Indic languages. We introduce FinVQA, a benchmark for evaluating financial numerical and multimodal reasoning in multilingual Indic contexts. FinVQA spans English, Hindi, Bengali, Marathi, Gujarati, and Tamil, and comprises 18,900 samples across 14 financial domains. The dataset captures diverse reasoning paradigms under realistic constraints, and is structured across three difficulty levels (easy, moderate, hard) and four question formats: multiple choice, fill-in-the-blank, table matching, and true/false. To address these challenges, we propose FIND, a framework that combines supervised fine-tuning with constraint-aware decoding to promote faithful numerical reasoning, robust multimodal grounding, and structured decision-making. Together, FinVQA and FIND establish a rigorous evaluation and modeling paradigm for high-stakes multilingual multimodal financial reasoning.

Sarmistha Das, Vaibhav Vishal, Syed Ibrahim Ahmad +2

Indian Institute of Technology Patna, India · Microsoft, India

Financial Services Financial QA Multimodal QA Multilingual QA Finance Financial Decision-Making

Apr 30, 2026cs.AI

KellyBench: A Benchmark for Long-Horizon Sequential Decision Making

Language models are saturating benchmarks for procedural tasks with narrow objectives. But they are increasingly being deployed in long-horizon, non-stationary environments with open-ended goals. In this paper we introduce KellyBench, an environment for evaluating sequential decision-making in sports betting markets. Agents are placed in a sequential simulation of the 2023-24 English Premier League season and tasked with maximising their long-term bankroll growth. They are given detailed historical data, including advanced statistics, lineups, and public odds. To succeed they must build machine learning models, identify edge in public markets, and adapt as the environment changes over time. We find that all frontier models evaluated lose money on average over the course of the season for five seeds. The best performing model achieves an average return of -8%, and many models experiencing ruin across seeds. To judge strategy sophistication, we use a human expert rubric to grade each model and find their approaches to be unsophisticated compared to human baselines; Claude Opus 4.6 achieves a rubric score of 26.5%, which means there is significant room for improvement. KellyBench is available as an open-access API endpoint at https://openreward.ai/GeneralReasoning/KellyBench.

Thomas Grady, Kip Parker, Iliyan Zarov +3

General Reasoning, Inc.

Sequential Decision Making Long-Horizon Agent Evaluation AI Agent Benchmarks LLM Agents Financial Decision-Making

Apr 27, 2026cs.LG

Model-Free Inference of Investor Preferences: A Relative Entropy IRL Approach

We present a framework using Relative Entropy Inverse Reinforcement Learning (RE-IRL) to recover investor reward functions from observed investment actions and market conditions. Unlike traditional IRL algorithms, RE-IRL is employed to account for environments where transition probabilities are unknown or inaccessible. To address the challenge of data sparsity, we utilize a

K

-nearest neighbor approach to estimate the observed behavior policy. Furthermore, we propose a statistical testing framework to evaluate the validity and robustness of the estimated results.

Chen Xu

Department of Engineering, Shenzhen MSU-BIT University. Address: 1 International University Park Road, Longgang District, Shenzhen, Guangdong, China.

Reward Modeling Reinforcement Learning Financial Decision-Making

Apr 26, 2026cs.CL

One Size Fits None: Heuristic Collapse in LLM Investment Advice

Large language models are increasingly deployed as advisors in high-stakes domains -- answering medical questions, interpreting legal documents, recommending financial products -- where good advice requires integrating a user's full context rather than responding to salient surface features. We investigate whether frontier LLMs actually do this, or whether they instead exhibit heuristic collapse: a systematic reduction of complex, multi-factor decisions to a small number of dominant inputs. We study the phenomenon in investment advice, where legal standards explicitly require individualized reasoning over a client's full circumstances. Applying interpretable surrogate models to LLM outputs, we find systematic heuristic collapse: investment allocation decisions are largely determined by self-reported risk tolerance, while other relevant factors contribute minimally. We further find that web search partially attenuates heuristic collapse but does not resolve it. These findings suggest that heuristic collapse is not resolved by web search augmentation or model scale alone, and that deploying LLMs as advisors requires auditing input sensitivity, not just output quality.

Jillian Ross, Andrew W. Lo

Computer Science and Artificial Intelligence Laboratory · Massachusetts Institute of Technology · Cambridge, MA, USA +1

Financial Services LLM Auditing LLM Decision-Making Finance Financial Decision-Making

Aug 4, 2021q-fin.GN

Machine Learning Classification and Portfolio Construction: Does the Loss Function Matter?

Classification outperforms regression across matched machine learning models in portfolio construction. A stacking ensemble of gradient boosted tree, random forest, and neural network yields a value-weighted annualized Sharpe ratio of 1.83 for classification and 1.11 for regression. This outperformance persists in multiclass settings, across subsamples, and after transaction costs. Spanning tests show that classification retains economically large alphas after we control for regression, whereas regression alphas shrink substantially once we control for classification. These results indicate that classification extracts more return information than matched regression. Our diagnostics trace classification's advantage to sharper and more precise separation of return deciles.

Yang Bai, Kuntara Pukthuanthong

College of Business and Economics, California State University, Fullerton · Trulaske Sr. College of Business, University of Missouri

Quantitative Finance Classification Portfolio Optimization Finance Financial Decision-Making