Overcoming the Incentive Collapse Paradox

ArXi:2603.27049v1 Announce Type: cross AI-assisted task delegation is increasingly common, yet human effort in such systems is costly and typically unobserved. Recent work by Bastani and Cachon; Sambasivan shows that accuracy-based payment schemes suffer from incentive collapse: as AI accuracy improves, sustaining positive human effort requires unbounded payments. We study this problem in a budget-constrained principal-agent framework with strategic human agents whose output accuracy depends on unobserved effort.