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Christoph Scheuch

Publications and source records attributed to Christoph Scheuch.

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Randomness in large language models: What researchers need to know (and report)

Large language models (LLMs) are increasingly used to generate data for research. Typical use cases are classifications, annotations, information extraction, and generation of numerical scores. Unlike conventional measurements, LLM outputs can vary across repeated requests even when the prompt and apparent model settings remain unchanged. This variation arises from deliberate sampling, silent model updates, numerical rounding, or expert routing. Setting a dedicated temperature parameter to zero removes deliberate sampling when that option is available, but it does not eliminate the other sources of randomness. Exact reproduction is therefore generally not possible when using proprietary application programming interfaces. Local execution of open-weight models offers greater control, but reproducibility still depends on the complete hardware and software stack. We illustrate these issues through sentiment classifications of corporate filings and examine their consequences for downstream regression results. We then propose a reporting standard for articles and replication packages, as well as guidance for data editors and authors. Together, these findings and recommendations establish that LLM outputs should be treated as draws from a distribution rather than as fixed measurements.

econ.GN

Building Trust Takes Time: Limits to Arbitrage for Blockchain-Based Assets

A blockchain replaces central counterparties with time-consuming consensus protocols to record the transfer of ownership. This settlement latency slows cross-exchange trading, exposing arbitrageurs to price risk. Off-chain settlement, instead, exposes arbitrageurs to costly default risk. We show with Bitcoin network and order book data that cross-exchange price differences coincide with periods of high settlement latency, asset flows chase arbitrage opportunities, and price differences across exchanges with low default risk are smaller. Blockchain-based trading thus faces a dilemma: Reliable consensus protocols require time-consuming settlement latency, leading to arbitrage limits. Circumventing such arbitrage costs is possible only by reinstalling trusted intermediation, which mitigates default risk.

q-fin.TR