The Verification Tax: Fundamental Limits of AI Auditing in the Rare-Error Regime

The reliability of AI generative models is typically measured by output correctness, yet in practice it depends on the effort required to verify those outputs. We argue that current evaluation metrics overlook a critical failure mode: Verification-Cost Errors (VCEs), defined as incorrect input-output pairs that a declared fraction of the verifier population fails to identify within the verification budget available in a given deployment context. Unlike standard notions of "hallucination", VCEs are defined operationally, by the failure of correct identification within budget rather than by any property of the output itself. Plausibility and authoritative presentation are hypothesised contributors to that failure, not defining conditions. To capture this asymmetry, we introduce the notion of verification cost relative to a deployment budget as an operational dimension that current evaluation does not routinely capture. The quantity is presented as a conceptual instrument rather than a finalized metric. Evidence from code generation and multi-modal document understanding shows that high benchmark accuracy can mask significant verification effort in practice. We therefore take the position that correctness alone is insufficient as a measure of reliability. AI evaluation should explicitly account for verification cost, reflecting whether errors can be detected under realistic resource constraints.

Standard calibration evaluation and recalibration methods assume access to predicted probabilities. We study one-bit threshold access, a setting in which probabilities are hidden and the evaluator observes only whether the predicted probability exceeds a single chosen threshold per sample. Under this restriction, we show that classifiers can nevertheless be evaluated and recalibrated without reconstructing their hidden scores. We derive a consistent estimator of True Calibration Error, unbiased estimators of strictly proper scoring rules, and a one-bit objective for Temperature Scaling whose expectation matches the standard log-loss objective. Across these settings, we quantify the statistical cost incurred by replacing standard probability-access procedures by our one-bit estimators. Finally, we instantiate the framework for black-box LLMs, where the logit_bias API parameter allows us to realize the required threshold queries in zero-shot binary question answering.

Calibration measures whether a model's predicted confidence aligns with its empirical accuracy, and is central to the reliable deployment of large language models (LLMs) in high-stakes domains such as medicine and law. While much recent work focuses on improving LLM calibration, the equally important question of how to evaluate it in realistic settings remains underdeveloped. Open-ended question answering (QA), the most common deployment setting for modern LLMs, is where existing evaluation methods fall short: logit-based metrics need restricted output formats and internal probabilities; verbalized confidence is self-reported and often overconfident; and sampling-based methods rely on task-specific extraction rules without a clear finite-sample target. We introduce Sem-ECE (Semantic-Sampling Expected Calibration Error), a calibration evaluation framework for open-ended QA that samples answers from the model, groups them into semantic classes, and uses the resulting frequencies as confidence. We study two estimators within this framework: Sem$_1$-ECE, the same-sample self-consistency score, and Sem$_2$-ECE, a held-out variant that separates answer selection from confidence evaluation. We prove both are asymptotically unbiased, and further show that they agree on easy questions but diverge on hard ones with Sem$_2$ achieving strictly smaller calibration error, so their gap also serves as a diagnostic for question difficulty. Experiments on three open-ended QA benchmarks across five leading commercial LLMs match our theoretical predictions and show that Sem-ECE outperforms verbalized confidence and existing sampling-based methods, while complementing logit-based evaluation when internal probabilities are unavailable.