aiqbench analysis
This research identifies a "scaling paradox" where increasing AI model size can degrade overall system performance if human operators overestimate the technology's capabilities, leading to reduced efficiency and profit losses. The study argues that optimizing organizational policies for perception alignment is often more valuable than simply deploying larger models, highlighting that AI scaling involves significant behavioral challenges beyond pure computation.
The Scaling Paradox in Human-AI Collaboration
arXiv:2608.00818v1 Announce Type: new Abstract: The discovery of scaling laws has highlighted the extraordinary potential of AI systems with a striking empirical pattern: as AI systems scale, their capabilities tend to improve predictably. Yet, in real-world applications, AI rarely operates in isolation; instead, it often works alongside humans, raising the question of whether these gains persist in human-AI collaboration. In this work, we develop an analytical model to examine when the empirical scaling benefits of AI translate into improved human-AI joint system performance. We demonstrate that the performance of a human-AI system can scale positively as the AI scales up-provided that humans have an accurate perception of the AI's capabilities. Human misperception, however, can fundamentally alter this relationship: i) when humans over-perceive the AI's capabilities, a scaling paradox may arise, in which greater AI scale reduces overall system performance and amplifies firm-level profit losses, and (ii) when humans under-perceive the AI's capabilities, performance still improves with scale but at a substantially slower rate. We further show that firms can actively manage these distortions through operational policies such as cost internalization and perception alignment, whose effectiveness depends on the economics of AI deployment and the direction of human misperception. These findings suggest that organizations may benefit more from managing the human-AI interface than from simply investing in larger, more expensive AI systems. More broadly, our results suggest that AI scaling should be viewed not only as a technological challenge, but also as a behavioral and operational one, and caution against the view that larger AI systems will automatically lead to better operational outcomes. Whether AI scaling creates value ultimately depends on how increased AI capabilities shape human beliefs and collaborative efforts.
Abstract:The discovery of scaling laws has highlighted the extraordinary potential of AI systems with a striking empirical pattern: as AI systems scale, their capabilities tend to improve predictably. Yet, in real-world applications, AI rarely operates in isolation; instead, it often works alongside humans, raising the question of whether these gains persist in human-AI collaboration. In this work, we develop an analytical model to examine when the empirical scaling benefits of AI translate into improved human-AI joint system performance. We demonstrate that the performance of a human-AI system can scale positively as the AI scales up-provided that humans have an accurate perception of the AI's capabilities. Human misperception, however, can fundamentally alter this relationship: i) when humans over-perceive the AI's capabilities, a scaling paradox may arise, in which greater AI scale reduces overall system performance and amplifies firm-level profit losses, and (ii) when humans under-perceive the AI's capabilities, performance still improves with scale but at a substantially slower rate. We further show that firms can actively manage these distortions through operational policies such as cost internalization and perception alignment, whose effectiveness depends on the economics of AI deployment and the direction of human misperception. These findings suggest that organizations may benefit more from managing the human-AI interface than from simply investing in larger, more expensive AI systems. More broadly, our results suggest that AI scaling should be viewed not only as a technological challenge, but also as a behavioral and operational one, and caution against the view that larger AI systems will automatically lead to better operational outcomes. Whether AI scaling creates value ultimately depends on how increased AI capabilities shape human beliefs and collaborative efforts.
Artificial Intelligence (cs.AI); General Economics (econ.GN)
arXiv:2608.00818 [cs.AI]
(or arXiv:2608.00818v1 [cs.AI] for this version)
https://doi.org/10.48550/arXiv.2608.00818 Focus to learn more arXiv-issued DOI via DataCite (pending registration)
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Full text under the publisher's open licence · 372 words
