Mind or Message? Auditing Theory of Mind in Multi-Agent Social Simulation

Cong Li, Cheng Chen, Thomas Fung, Alex Rossi, Yi Li

Language model agents are increasingly used to simulate social interaction, and the resulting transcripts read as though the agents understand one another. We ask whether that appearance rests on a model of the partner's mind or on the surface record of what the partner said. We build a social simulation in which both questions have exact answers: 40 multi-issue negotiations whose hidden preference weights and whose full Pareto frontier are known by construction. Two model families negotiate across 160 dyads, every transcript is frozen before any measurement, and 2880 counterfactual probes then hold the evidence byte identical while moving one factor at a time: the reader's own stake, the partner's tone, an identity label, and the order of recursion. The agents are socially fluent and economically poor. They reach agreement in 96.2% of dyads with 0 protocol failures, yet only 0.7% of deals land on the Pareto frontier, they leave 20.5% of the available joint value unclaimed, and they miss the one issue on which their interests are perfectly aligned in 76.6% of deals; on the frontier and on that aligned issue, a package drawn at random from the set both sides would accept does as…