Skip to content
Preprint

Ordinal Gates, Cardinal Bets: Matching LLM Confidence to the Financial Decision Operator

Aug 2026 · 0 citations · 26 references
Computer Science

Abstract

LLM confidence scores are not independently deployable objects: their decision value depends on the downstream operator and exposure controller that consume them. Monotone recalibration cannot change a coverage-matched rank-based gate, whereas position sizing consumes score magnitude, so changing a confidence map can invalidate a scale fitted to the previous score distribution. We test this on FactSet news for Nasdaq-100 equities, fitting maps and scales on 2021 and evaluating nine open-weight LLMs out-of-sample on 2022--2023. Cross-applying raw and correctness maps with independently fitted scales shows that the two components are not portable alone: scale transfer reduces certainty-equivalent return (CER) in $8/9$ models and produces large risk-target errors. Matching each map with its fitted scale improves ensemble CER by $9.2$ percentage points per year under frozen-scale control ($p<0.001$), and the effect remains significant when the single largest-contributing model is excluded ($+5.5$pp/yr), so it is not driven by one case. Under an identical adaptive-volatility controller, however, the incremental effect falls to $+1.6$pp/yr, with a significant controller interaction. Annual walk-forward effects are smaller, although map--scale interaction remains positive in every fold. Confidence transformations should therefore be evaluated jointly with the downstream controllers that consume them.

View source

Similar papers

Open access Aug 2026

A Reproducible Stability Audit of Multi-Criteria ETF Ranking for FinTech Decision Support

Digital-investment decision support can reduce heterogeneous exchange-traded fund (ETF) risk–return signals to a point ranking, but that order can hide uncertainty from sampling, normalization, criterion choice, market regimes, and the alternative set. We present a retrospective, reproducibilityfocused audit of 60 ETFs...

Jia-Qi Yao · 0 citations
#machine learning Preprint Sep 2026

Counterfactual Tool Ranking under Utility, Cost, and Privilege Constraints

Counterfactual tool evaluation must distinguish authority, historical support, and what a comparison actually estimates. We study these distinctions with eleven executable enterprise-inspired tools, exact-propensity logs, and real local Model Context Protocol transport. An initial 45-run synthetic study is retained, th...

Jia-Peng Li · 3 citations
Preprint Aug 2026

Calibration-Induced Degeneracy in LLM Financial Forecasting: An Audit-Trailed Case Study on Next-Day Market Risk

Costly LLM features matter only if calibration lets them affect the forecast. We document a failure of this link in a next-day risk study of two broad-market funds. Full-history scoring preceded the 2022 calibration. Calibration then set all four LLM weights to zero. The 856 later scores therefore could not affect the...

A. Mohanty · 0 citations
Sep 2026

Reliability Assessment of Machine-Learning Automated Valuation Models : Apartment-Complex Holdout Validation in the Seoul Metropolitan Area

This study evaluates the reliability of machine-learning automated valuation models (AVMs) when repeated apartment-complex observations are explicitly controlled. AI-based AVMs refer here to random forest, LightGBM, and XGBoost, which are compared with an unpenalized hedonic OLS benchmark using 129,237 apartment transa...

Jae H. Kim · 0 citations
#machine learning Preprint Oct 2026

How Execution Assumptions Change Short-Horizon Sharpe Rankings: Evidence from a Synthetic Trading Benchmark

Backtests of LLM trading agents often assume that every order fills at the closing price. We ask whether this choice changes only reported returns or also the order of the agents. Five prompted LLM signal policies and seven classical baselines trade the same synthetic price paths under six execution settings, from near...

Wei-Cheng Xue · 0 citations

We use cookies to run the site and, with your consent, for analytics and to show ads. See our Cookie Policy.