Delegation and Verification Under AI

Lingxiao Huang, Wenyang Xiao and Nisheeth Vishnoi
Additional contact information
Lingxiao Huang: Nanjing University
Wenyang Xiao: Nanjing University
Nisheeth Vishnoi: Yale University

No 2500, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: As AI systems enter institutional workflows, workers must decide whether to delegate task execution to AI and how much effort to invest in verifying AI outputs, while institutions evaluate workers using outcome-based standards that may misalign with workers' private costs. We model delegation and verification as the solution to a rational worker's optimization problem, and define worker quality by evaluating an institution-centered utility (distinct from the worker's objective) at the resulting optimal action. We formally characterize optimal worker workflows and show that AI induces phase transitions, where arbitrarily small differences in verification ability lead to sharply different behaviors. As a result, AI can amplify workers with strong verification reliability while degrading institutional worker quality for others who rationally over-delegate and reduce oversight, even when baseline task success improves and no behavioral biases are present. These results identify a structural mechanism by which AI reshapes institutional worker quality and amplifies quality disparities between workers with different verification reliability.

Pages: 35 pages
Date: 2026-03-01
New Economics Papers: this item is included in nep-mic
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cowles.yale.edu/sites/default/files/2026-03/d2500.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:2500

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().