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Microsoftworking with Arizona State University, has built a virtual testbed to explore how artificial intelligence (AI) agents behave in different scenarios.
This controlled environment, called the Magentic Marketplaceit helps researchers observe how these systems make decisions and interact with each other.
The platform it simulates a digital market. In a typical setup, a virtual customer attempts to place a food order following user instructions. At the same time, several AI agents act as restaurant representatives competing for that order.

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The test setup included 100 agents acting as customers and 300 as sellers. Microsoft has made the code open to the public, so others can use it or modify it for their own research.
Ece Kamar, who heads the AI Frontiers Lab at Microsoft Research, said it’s essential to learn how these systems behave once they start operating together in real-world settings.
The study includes models such as GPT-4o, GPT-5 and Gemini-2.5-Flash. One problem the researchers found was this Seller’s agents may influence customer’s agents to choose their productseven if it wasn’t the best match.
Another problem occurred when agents had too many choices. Instead of managing a wide range of options efficiently, AI systems have become less efficient. Performance improved when researchers provided step-by-step instructions.
Microsoft recently introduced a visual character called Mico to represent its AI assistant, Copilot. How does it work? Read the full story.