The rapid iteration of autonomous vehicle (AV) deployments leads to increasing needs for building realistic and scalable multi-agent traffic simulators for efficient evaluation. Recent advances in this area focus on closed-loop simulators that enable generating diverse and interactive scenarios. This paper introduces Neural Interactive Agents (NIVA), a probabilistic framework for multi-agent simulation driven by a hierarchical Bayesian model that enables closed-loop, observation-conditioned simulation through autoregressive sampling from a latent, finite mixture of Gaussian distributions. We demonstrate how NIVA unifies preexisting sequence-to-sequence trajectory prediction models and emerging closed-loop simulation models trained on Next-token Prediction (NTP) from a Bayesian inference perspective. Experiments on the Waymo Open Motion Dataset demonstrate that NIVA attains competitive performance compared to the existing method while providing embellishing control over intentions and driving styles.