Are LLMs Rational Investors? A Study on the Financial Bias in LLMs

Abstract

Large language models (LLMs) excel in natural language generation but also exhibit biases, particularly in gender, race, and religion, which can be amplified with widespread use. However, research on biases in specific domains, such as finance, remains limited. To address this gap, we conducted a comprehensive evaluation of 23 leading LLMs and found varying degrees of financial bias, including more pronounced biases in financial-specific LLMs (FinLLMs). In response, we propose the Financial Bias Indicators (FBI) framework, which includes components like the Bias Unveiler, Bias Detective, Bias Tracker, and Bias Antidote, designed to identify, detect, analyze, and mitigate financial biases. Our analysis explores the root causes of these biases and introduces a debiasing method based on financial causal knowledge, alongside three other debiasing techniques. For the most biased model, we successfully reduced bias by 68% according to key metrics. This study advances our understanding of LLM biases in finance and highlights the need for greater scrutiny in their application within this critical domain.