🤖 AI Summary
This study addresses the critical challenge of dynamically allocating AI decision authority in high-stakes environments where evidence quality, uncertainty, and organizational objectives evolve over time. The work proposes the first Bayesian governance framework, modeling adaptive delegation as a governance-aware partially observable Markov decision process (POMDP). By leveraging Bayesian inference to estimate the information state and integrating sequential optimization for real-time authority adjustment, the approach explicitly calibrates AI uncertainty against organizational risk aversion in an interpretable manner. Evaluated in heterogeneous AI quality settings, the method significantly outperforms five benchmark strategies, demonstrating superior generalizability, robustness, graceful degradation, and adaptability across diverse governance scenarios.
📝 Abstract
Organizations increasingly use large language models and agentic AI systems to generate probabilistic assessments and candidate actions in high-consequence settings. This creates a managerial problem distinct from prediction: how should organizations allocate decision authority to AI-generated recommendations as evidence quality, uncertainty, and organizational objectives evolve over time? Existing AI governance frameworks emphasize transparency, documentation, oversight, and regulatory compliance, but provide limited quantitative guidance for dynamically allocating decision authority under uncertainty. To address this challenge, we formulate adaptive AI delegation as a Governance-Aware Partially Observable Markov Decision Process (POMDP) in which Bayesian inference estimates the informational state and sequential optimization determines delegated AI authority.
The paper also develops a quantitative validation and benchmarking framework for governance policies. Synthetic stress tests, reported LLM-confidence robustness, forecast-accuracy validation, governance-appetite sensitivity, and fragile-AI early-warning experiments evaluate whether the proposed policy exhibits graceful degradation, robustness to confidence-only perturbations, adaptive delegation under improving evidence quality, and interpretable calibration of institutional conservatism. The Governance-Aware POMDP is further benchmarked against five representative governance strategies operating under identical Bayesian beliefs, information, and governance objectives. The results show that while specialized heuristics perform well in stationary settings, sequential Bayesian governance provides the strongest general-purpose governance policy across heterogeneous AI-quality regimes by adaptively allocating organizational decision authority under uncertainty.