When Should a Human Take Back Control? Optimal Delegation under Turbulent AI Risk

Haoze Yan, Julien Roze, Ved Upadhyay, Unal Tatar, Thibaut Mastrolia

Deploying AI systems requires deciding when to delegate tasks and when humans should intervene to monitor and mitigate risk induced by AI operations. These decisions are challenging when failures cluster: a hallucination or harmful output can trigger further errors, creating periods of elevated risk. We introduce a continuous-time framework for learning adaptive human oversight under such turbulent AI risk. Existing oversight and delegation formulations condition on history but do not model incident clustering, or its suppression by supervision effort, jointly with the delegation decision and this study fixes this gap. The self-exciting dynamics capture how risk events increase the likelihood of subsequent events, making their timing and history central to decision-making. We formulate a stochastic control problem combining human actions, monitoring effort, and switching between human-AI-assisted operation and full AI delegation, balancing operational rewards against oversight costs, and cascading AI-failures and induced uncertainty. Human participation is an endogenous component of risk management: the policy determines both when oversight is needed and how much effort to…