We present a novel, open-source social network simulation framework MOSAIC, where generative language agents predict user behaviors such as liking, sharing, and flagging content. This simulation combines LLM agents with a directed social graph to analyze emergent deception behaviors and gain a better understanding of how users determine the veracity of online social content. By constructing user representations from diverse fine-grained actual user personas, our system enables multi-agent simulations that model content dissemination and engagement dynamics at scale. Within this framework, we evaluate three different content moderation strategies with simulated misinformation dissemination, and we find that they not only mitigate the spread of non-factual content but also increase user engagement. In addition, we analyze the trajectories of popular content in our simulations, and explore whether simulation agents' articulated reasoning for their social interactions truly aligns with their collective engagement patterns. We open-source our simulation software to encourage further research within AI and social sciences.