Sina Seyfi (Aalto) - Can LLMs Discover Novel Economic Theories?

Tutkimusseminaarit

Research Seminar - Sina Seyfi (Aalto) - Can LLMs Discover Novel Economic Theories?

Co-authors: Alejandro Lopez-Lira (University of Florida) and Yuehua Tang (University of Florida)

Abstract
We propose AutoTheory, a system for discovering economic theories using large language models and evolutionary search. The system combines LLM-based theory generation with mathematical auditing, pseudocode-to-code translation with review, calibration, quantitative scoring, and simulated peer review. To promote diversity, each run draws a random combination of expert personas from 20 methodological perspectives. We apply the system to two empirical puzzles: the price-multiplier scaling puzzle and the equity term structure (dividend strip) puzzle. For the price-multiplier puzzle, the system discovers multiple distinct mechanisms, spanning attention costs, limited diversification, portfolio constraints, and liquidity channels, with the best models matching all three empirical targets with as few as two free parameters.

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