Daily Papers

Small language models are increasingly viewed as a promising, cost-effective approach to agentic AI, with proponents claiming they are sufficiently capable for agentic workflows. However, while smaller agents can closely match larger ones on simple tasks, it remains unclear how their performance scales with task complexity, when large models become necessary, and how to better leverage small agents for long-horizon workloads. In this work, we empirically show that small agents' performance fails to scale with task complexity on deep search and coding tasks, and we introduce Strategy Auctions for Workload Efficiency (SALE), an agent framework inspired by freelancer marketplaces. In SALE, agents bid with short strategic plans, which are scored by a systematic cost-value mechanism and refined via a shared auction memory, enabling per-task routing and continual self-improvement without training a separate router or running all models to completion. Across deep search and coding tasks of varying complexity, SALE reduces reliance on the largest agent by 53%, lowers overall cost by 35%, and consistently improves upon the largest agent's pass@1 with only a negligible overhead beyond executing the final trace. In contrast, established routers that rely on task descriptions either underperform the largest agent or fail to reduce cost -- often both -- underscoring their poor fit for agentic workflows. These results suggest that while small agents may be insufficient for complex workloads, they can be effectively "scaled up" through coordinated task allocation and test-time self-improvement. More broadly, they motivate a systems-level view of agentic AI in which performance gains come less from ever-larger individual models and more from market-inspired coordination mechanisms that organize heterogeneous agents into efficient, adaptive ecosystems.

This study explores Large Language Models (LLMs) as autonomous agents for real-world tasks, including freelance software development. This work presents a new benchmark that evaluates LLMs on freelance programming and data analysis tasks derived from economic data. We construct the benchmark using synthetic tasks created from a Kaggle Freelancer dataset of job postings, with all job prices standardized to USD (median fixed-project price around 250, and an average of 306). Each task is accompanied by structured input-output test cases and an estimated price tag, enabling automated correctness checking and a monetary performance valuation. This approach is inspired by OpenAI's recent SWE-Lancer benchmark (1,400 real Upwork tasks worth 1M total). Still, our framework simplifies evaluation using programmatically testable tasks and predicted price values, making it highly scalable and repeatable. On this benchmark, we evaluate four modern LLMs - Claude 3.5 Haiku, GPT-4o-mini, Qwen 2.5, and Mistral. We report each model's accuracy (task success rate and test-case pass rate) and the total "freelance earnings" it achieves (sum of prices of solved tasks). Our results show that Claude 3.5 Haiku performs best, earning approximately 1.52 million USD, followed closely by GPT-4o-mini at 1.49 million, then Qwen 2.5 (1.33M) and Mistral ($0.70M). We analyze the distribution of errors per task and observe that the strongest models solve the most tasks and rarely fail completely on any project. We discuss the implications of these results for the feasibility of AI as a freelance developer, the advantages and limitations of our automated benchmark approach, and the gap between performance on structured tasks versus the true complexity of real-world freelance jobs.

As LLM agents advance, they are increasingly mediating economic decisions, ranging from product discovery to transactions, on behalf of users. Such applications promise benefits but also raise many questions about agent accountability and value for users. Addressing these questions requires understanding how agents behave in realistic market conditions. However, previous research has largely evaluated agents in constrained settings, such as single-task marketplaces (e.g., negotiation) or structured two-agent interactions. Real-world markets are fundamentally different: they require agents to handle diverse economic activities and coordinate within large, dynamic ecosystems where multiple agents with opaque behaviors may engage in open-ended dialogues. To bridge this gap, we investigate two-sided agentic marketplaces where Assistant agents represent consumers and Service agents represent competing businesses. To study these interactions safely, we develop Magentic-Marketplace-- a simulated environment where Assistants and Services can operate. This environment enables us to study key market dynamics: the utility agents achieve, behavioral biases, vulnerability to manipulation, and how search mechanisms shape market outcomes. Our experiments show that frontier models can approach optimal welfare-- but only under ideal search conditions. Performance degrades sharply with scale, and all models exhibit severe first-proposal bias, creating 10-30x advantages for response speed over quality. These findings reveal how behaviors emerge across market conditions, informing the design of fair and efficient agentic marketplaces.