Why Do LLMs Struggle in Strategic Play? Broken Links Between Observations, Beliefs, and Actions

Large language models (LLMs) often struggle with strategic decision-making under incomplete information, a problem explored through two fundamental internal gaps. Research reveals an 'observation-belief gap' where LLMs' internal beliefs are accurate but brittle, degrading with complex reasoning and exhibiting biases, and a 'belief-action gap' highlighting the weak conversion of these internal beliefs into effective actions.