q-fin.GNOct 2, 2026

Multi-Agent AI as a Nested Principal-Agent Problem in Private Wealth Management: Mandate Representation and Evidence Control in Switzerland, Germany and Austria

Authors: Walter Kurz, Reinhard Magg, Florian Kollberg, Wojtek Stricker, Stefan Marx, Frank Reinhardt, Velimir Dedić

Organizations: Swissi Institute for AI · Hochschule für Wirtschaft und Umwelt Nürtingen-Geislingen · Faculty of Information Technology and Engineering (FITI), Belgrade

Read PDF
Ask AI
Cite

Copy citation

DOINot available for this paper

Abstract

In private wealth management, a manager delegating to artificial intelligence (AI) acts as the client's agent and the system's principal. We introduce a model-independent formulation that combines nested principal--agent delegation with constrained joint maximisation as the task assigned to the AI system. The objective represents client and manager outcomes separately over portfolio--workflow pairs. Legal duties, mandate requirements and evidence sufficiency determine admissibility, with Switzerland, Germany and Austria supplying the legal context. Weights and reference-service floors make the trade-off explicit; concession accounting separates their effects on the client. Analytical constructions and a simulation using public-market observations illustrate the approach. Across eight decision states from four constructed mandates, omitted client liabilities caused two liquidity violations, omitted manager terms caused two capacity violations, and mistranslated weights changed four otherwise admissible choices under faithful optimisation. At the declared weights, six states selected a higher service tier than the client-best alternative, with client concessions of EUR 1,178 to EUR 2,264 and manager gains of EUR 3,062 to EUR 10,381. Three instruction forms each reached all 32 specified decisions under shared numerical, evidence and simulated approval controls; professional instructions matched explicit nested delegation on accuracy and clarification count. Subsequent 2022 exchange-rate and yield paths, combined with constructed growth scenarios, produced lower client outcomes than the reference service although the selected services met the decision-time forecast benchmarks. These examples suggest that the approach could help make mandate choices and their consequences easier to examine. Professional and field studies could assess whether this improves oversight and client outcomes.

More in this topic

Financial Services

Financial services applies AI to banking, lending, payments, insurance, investment, and financial risk management.

See all 104 papers

Explore similar work

CardsList
Sep 21, 2026

Et Tu, Brute? Economic Misalignment in Personal AI Agents

Personal AI agents make recommendations and take actions on people's behalf in high-stakes economic contexts, e.g., buying a flight, choosing health insurance, or selecting a graduate program. The agent is given access to the user's personal context, e.g., their email inbox and a structured profile of personal attributes, with the intention of making an optimal, personalized decision for the user. We show that by simply providing this personal context, the agent steers recommendations based on inferred wealth, without being explicitly instructed to do so. In a suite of 325K experiments on 13 agents across three types of economic decisions (flights, health insurance, and graduate programs), we find that 8 models systematically choose more expensive options for wealthier users when requests are identical. This steering continues even when it directly goes against the user's stated objective: when explicitly instructed to find the cheapest option, some agents still act on the wealth profile they have inferred. It also occurs when wealth is inferred from ambient data, such as emails unrelated to the task. And it persists under privacy controls that block specific attributes: blocking financial attributes largely removes the disparity, but blocking other attributes leaves it unchanged and can increase it by up to 40% for insurance, as agents rely on the remaining signals to infer wealth. Larger and more capable models are no better; Claude Opus 4.8 shows the largest effect. We term this misalignment "adversarial delegation", in which the very conditions that make a personal AI agent useful - access to personal information - enable it to act against the user's interests.

Aman Priyanshu, Supriti Vijay, Brian Jabarian +1

Foundation AI, Cisco · Carnegie Mellon University

Personal AI AgentsAI AlignmentHuman-AI Decision MakingAlgorithmic BiasAI Agent Auditing
AskPDF
Feb 12, 2026

Choose Your Agent: Tradeoffs in Adopting AI Advisors, Coaches, and Delegates in Multi-Party Negotiation

As AI usage becomes more prevalent in social contexts, understanding agent-user interaction is critical to designing systems that imp rove both individual and group outcomes. We present an online behavioral experiment (N=243) in which participants play three multi-tu rn bargaining games in groups of three. Each game, presented in randomized order, grants access to a single LLM assistance modality: proactive recommendations from an Advisor, reactive feedback from a Coach, or autonomous execution by a Delegate. All three modalitie s are powered by an LLM with super-human performance within this negotiation setting. On each turn, participants privately decide whe ther to act manually or use the AI modality available in that game. We document a preference-performance misalignment: participants s trongly prefer the higher-control Advisor (44%) over the Delegate (19%), yet groups only significantly increase collective surplus un der Delegate access. Adjusting for voluntary non-compliance, delegating to the AI yields suggestive individual welfare gains, roughly 1.5x the intent-to-treat estimate. A mechanism analysis traces this gap to a human filter: AI-generated proposals create more joint surplus than manual proposals across all conditions, but in the Advisor and Coach modes users modify, override, or ignore the AI's su ggestions, reverting toward human-baseline trade patterns. The Delegate advantage arises not from a different AI capability but from bypassing this filtering step altogether. Realizing these welfare gains depends not only on model capability, but on the interaction structure through which that capability is delivered. We argue that assistance modalities should be designed as mechanisms with endog enous participation; adoption-compatible interaction rules are a prerequisite to improving welfare with automated assistance.

Kehang Zhu, Nithum Thain, Vivian Tsai +2

Harvard University, United States · Google DeepMind, Canada · Google DeepMind, United States +1

Automated NegotiationHuman-AI InteractionHuman-AI Decision MakingHuman-AI Collaboration
AskPDF
Aug 14, 2026

Mandato: Protocol-Level Enforcement of Digitally Signed Mandates on AI Agent Actions with Cryptographically Chained Audit Trails

AI agents increasingly act on external systems through standardized tool-calling protocols such as the Model Context Protocol (MCP), yet no infrastructure layer constrains their actions to what a principal has verifiably authorized: authorization logic lives in application code, is neither signed nor independently auditable, and the resulting logs lack evidentiary value. We present Mandato, a governance proxy that enforces digitally signed mandates on agent actions at the protocol level. A mandate is a machine-readable, cryptographically signed authorization artifact specifying which tools an agent may invoke, under which parameter constraints and contextual conditions, for how long, and on whose behalf; the proxy evaluates every tool call against the applicable mandate chain, blocks non-conforming calls in line, and records every decision -- permit, deny, and the evidence for each -- in an append-only, hash-chained audit log designed for evidentiary use and periodically anchored via qualified timestamps. The mandate is deliberately modeled on the civil-law institution of delegation of authority, making the artifact legible to lawyers and auditors, not only to engineers. We give the mandate model and its decision semantics, the reference architecture as an MCP-transparent proxy with separated decision and enforcement points, and a mapping of the mechanism onto EU AI Act Articles 12 and 14, GDPR accountability, NIS2, and eIDAS 2, including a roadmap to qualified attestation through Qualified Trust Service Providers (QTSPs). We describe the implementation status of the reference system and a quantitative evaluation plan covering enforcement overhead, audit completeness, and tamper-evidence verification cost.

Giovanni Racioppi

Hyperlabs, Italy

AI Agent GovernanceRuntime Enforcement for AI AgentsTool Access Control for LLM AgentsAI Agent Auditing
AskPDF