LLMs are Greedy Agents: Effects of RL Fine-tuning on Decision-Making Abilities

The success of Large Language Models (LLMs) has sparked interest in various agentic applications. A key hypothesis is that LLMs, leveraging common sense and Chain-of-Thought (CoT) reasoning, can effectively explore and efficiently solve complex domains. However, LLM agents have been found to suffer from sub-optimal exploration and the knowing-doing gap, the inability to effectively act on knowledge present in the model. In this work, we systematically study why LLMs perform sub-optimally in decision-making scenarios. In particular, we closely examine three prevalent failure modes: greediness, frequency bias, and the knowing-doing gap. We propose mitigation of these shortcomings by fine-tuning via Reinforcement Learning (RL) on self-generated CoT rationales. Our experiments across multi-armed bandits, contextual bandits, and Tic-tac-toe, demonstrate that RL fine-tuning enhances the decisionmaking abilities of LLMs by increasing exploration and narrowing the knowing-doing gap. Finally, we study both classic exploration mechanisms, such as 𝜖-greedy, and LLM-specific approaches, such as self-correction and self-consistency, to enable more effective fine-tuning of LLMs for decision-making.