Precautionary Governance of Autonomous AI: Legal Personhood as Functional Instrument

Generative artificial intelligence systems increasingly participate in research, law, education, media, and governance. Their fluent and adaptive outputs create an experience of collaboration. However, these systems do not bear responsibility, incur liability, or share stakes in downstream consequences. This structural asymmetry has already produced sanctions, professional errors, and governance failures in high-stakes contexts We argue that stable human-AI coexistence is an institutional achievement that depends on governance infrastructure capable of distributing residual risk. Drawing on institutional analysis and evolutionary cooperation theory, we introduce a formal inequality that specifies when reliance on AI yields positive expected cooperative value. The model makes explicit how governance conditions, system policy, and accountability regimes jointly determine whether cooperation is rational or structurally defective. From this formalization we derive a cooperation ecology framework with six design principles: reciprocity contracts, visible trust infrastructure, conditional cooperation modes, defection-mitigation mechanisms, narrative literacy against authority theatre, and an Earth-first sustainability constraint. We operationalize the framework through three policy artefacts: a Human-AI Cooperation Charter, a Defection Risk Register, and a Cooperation Readiness Audit. Together, these elements shift the unit of analysis from the user-AI dyad to the institutional environment that shapes incentives, signals, accountability, and repair. The paper provides a theoretical foundation and practical toolkit for designing human-AI systems that can sustain accountable, trustworthy cooperation over time.

Existing accountability frameworks for AI systems, legal, ethical, and regulatory, rest on a shared assumption: for any consequential outcome, at least one identifiable person had enough involvement and foresight to bear meaningful responsibility. This paper proves that agentic AI systems violate this assumption not as an engineering limitation but as a mathematical necessity once autonomy exceeds a computable threshold. We introduce Human-Agent Collectives, a formalisation of joint human-AI systems where agents are modelled as state-policy tuples within a shared structural causal model. Autonomy is characterised through a four-dimensional information-theoretic profile (epistemic, executive, evaluative, social); collective behaviour through interaction graphs and joint action spaces. We axiomatise legitimate accountability through four minimal properties: Attributability (responsibility requires causal contribution), Foreseeability Bound (responsibility cannot exceed predictive capacity), Non-Vacuity (at least one agent bears non-trivial responsibility), and Completeness (all responsibility must be fully allocated). Our central result, the Accountability Incompleteness Theorem, proves that for any collective whose compound autonomy exceeds the Accountability Horizon and whose interaction graph contains a human-AI feedback cycle, no framework can satisfy all four properties simultaneously. The impossibility is structural: transparency, audits, and oversight cannot resolve it without reducing autonomy. Below the threshold, legitimate frameworks exist, establishing a sharp phase transition. Experiments on 3,000 synthetic collectives confirm all predictions with zero violations. This is the first impossibility result in AI governance, establishing a formal boundary below which current paradigms remain valid and above which distributed accountability mechanisms become necessary.

The proliferation of agentic artificial intelligence systems--characterized by autonomous goal-seeking, tool use, and multi-agent coordination--presents unprecedented challenges to existing legal and financial regulatory frameworks. While traditional AI governance has focused on model-level alignment through training-time interventions such as Reinforcement Learning from Human Feedback (RLHF), the deployment of large language models (LLMs) as persistent agents necessitates a paradigm shift toward institutional governance structures. This paper examines the intersection of agentic AI, Retrieval-Augmented Generation (RAG), and their implications for legal accountability and financial market integrity. Through analysis of the Institutional AI framework, we argue that alignment must be reconceptualized as a mechanism design problem involving runtime governance graphs, sanction functions, and observable behavioral constraints rather than internalized constitutional values[...].The analysis concludes that the future of AI governance lies not in perfecting isolated model behavior, but in architecting institutional environments where compliant behavior emerges as the dominant strategy through carefully calibrated payoff landscapes.