When Execution Is Cheap: Specification, Evaluation, and Rent Capture in AI-Enabled Work

Babu George
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Babu George: Alcorn State University

No 4az6c_v1, SocArXiv from Center for Open Science

Abstract: As artificial intelligence lowers the cost of executing well-specified tasks, economic value may shift toward defining desired outcomes and evaluating machine-generated outputs. This paper examines the conditions under which that shift creates economic rents and identifies who may capture them. It separates defining success into four activities: eliciting intent, selecting among admissible specifications, ratifying a choice, and validating outputs. Two models clarify the underlying mechanisms. The first shows that gains from cheaper execution approach a ceiling determined by evaluation cost, which makes evaluator attention more consequential as generation becomes inexpensive. The second shows that generating more candidates increases the marginal value of proxy fidelity, linking abundant output to specification overfitting and Goodhart-type failures. These mechanisms indicate where value may concentrate without determining who receives the returns. Rent requires inelastic supply, exclusion from the created surplus, and the absence of cheaper substitutes. These conditions are most likely when specifications scale across many executions, ratification carries liability, trust institutions certify judgment, organizational systems control codified knowledge, or concentrated model providers set influential defaults. The analysis further distinguishes machine-checkable evaluation against a stated specification from a principal’s assessment of fit to purpose. The former is increasingly commoditized; the latter remains tied to authority, attention, and accountability. The paper develops six testable predictions and a factorial experiment examining evaluation costs, specification fidelity, authority drift, and psychological ownership. Cheap execution relocates bottlenecks, while institutions and market structure determine whether specification, evaluation, default setting, or scarce execution inputs generate rents and who captures them.

Date: 2026-10-12
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:4az6c_v1

DOI: 10.31235/osf.io/4az6c_v1

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