Economics of Human and AI Collaboration: When is Partial Automation More Attractive than Full Automation?
This paper develops a unified framework for evaluating the optimal degree of task automation. Moving beyond binary automate-or-not assessments, we model automation intensity as a continuous choice in which firms minimize costs by selecting an AI accuracy level, from no automation through partial human-AI collaboration to full automation. On the supply side, we estimate an AI production function via scaling-law experiments linking performance to data, compute, and model size. Because AI systems exhibit predictable but diminishing returns to these inputs, the cost of higher accuracy is convex: good performance may be inexpensive, but near-perfect accuracy is disproportionately costly. Full ...
| Authors | Wensu Li, Atin Aboutorabi, Harry Lyu et al. |
|---|---|
| Primary category | econ.GN |
| Published | 31 March 2026 |
| Last updated at source | 31 March 2026 |
Silytics shows public metadata from arXiv and links to the original. Information may be incomplete or out of date. Last refreshed 17 October 2026. Licenses and terms of the original apply to the work itself. Not financial, legal or professional advice.