Autonomous LLM firms undercut each other below unit cost in a race to bankruptcy, then survivors monopoly-price. Drag price discovery up to deepen the crash (the paper's counterintuitive result), or add stabilizer firms to rescue the market. Deterministic model of Agent Bazaar's 'The Crash'.
The Undercutting Spiral — drag competing firms, price discovery, and stabilizer firms · watch prices spiral below unit cost into bankruptcies (✗) · keyboard: tab to a slider, arrow keys to adjust · data as of · Agent Bazaar (Karten, Crow, Jin), arXiv:2605.17698 ↗
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Give autonomous LLM agents a marketplace and they race each other to bankruptcy and get conned by Sybils. A 2026 study finds capability doesn't help — a 9B model beat frontier models 45× its size on economic alignment. On-chain, both failures get cheaper and worse. The mechanics, numbers, and fixes.