Daily Papers

The rapid evolution of autonomous, agentic artificial intelligence within financial services has introduced an existential architectural crisis: large language models (LLMs) are probabilistic, non-deterministic systems operating in domains that demand absolute, mathematically verifiable compliance guarantees. Existing guardrail solutions -- including NVIDIA NeMo Guardrails and Guardrails AI -- rely on probabilistic classifiers and syntactic validators that are fundamentally inadequate for enforcing complex multi-variable regulatory constraints mandated by the SEC, FINRA, and OCC. This paper presents the Lean-Agent Protocol, a formal-verification-based AI guardrail platform that leverages the Aristotle neural-symbolic model developed by Harmonic AI to auto-formalize institutional policies into Lean 4 code. Every proposed agentic action is treated as a mathematical conjecture: execution is permitted if and only if the Lean 4 kernel proves that the action satisfies pre-compiled regulatory axioms. This architecture provides cryptographic-level compliance certainty at microsecond latency, directly satisfying SEC Rule 15c3-5, OCC Bulletin 2011-12, FINRA Rule 3110, and CFPB explainability mandates. A three-phase implementation roadmap from shadow verification through enterprise-scale deployment is provided.

The rapid advancement of artificial intelligence (AI) systems in critical domains like healthcare, justice, and social services has sparked numerous regulatory initiatives aimed at ensuring their safe deployment. Current regulatory frameworks, exemplified by recent US and EU efforts, primarily focus on procedural guidelines while presuming that scientific benchmarking can effectively validate AI safety, similar to how crash tests verify vehicle safety or clinical trials validate drug efficacy. However, this approach fundamentally misunderstands the unique technical challenges posed by modern AI systems. Through systematic analysis of successful technology regulation case studies, we demonstrate that effective scientific regulation requires a causal theory linking observable test outcomes to future performance - for instance, how a vehicle's crash resistance at one speed predicts its safety at lower speeds. We show that deep learning models, which learn complex statistical patterns from training data without explicit causal mechanisms, preclude such guarantees. This limitation renders traditional regulatory approaches inadequate for ensuring AI safety. Moving forward, we call for regulators to reckon with this limitation, and propose a preliminary two-tiered regulatory framework that acknowledges these constraints: mandating human oversight for high-risk applications while developing appropriate risk communication strategies for lower-risk uses. Our findings highlight the urgent need to reconsider fundamental assumptions in AI regulation and suggest a concrete path forward for policymakers and researchers.

Regulatory documents, issued by governmental regulatory bodies, establish rules, guidelines, and standards that organizations must adhere to for legal compliance. These documents, characterized by their length, complexity and frequent updates, are challenging to interpret, requiring significant allocation of time and expertise on the part of organizations to ensure ongoing compliance.Regulatory Natural Language Processing (RegNLP) is a multidisciplinary subfield aimed at simplifying access to and interpretation of regulatory rules and obligations. We define an Automated Question-Passage Generation task for RegNLP, create the ObliQA dataset containing 27,869 questions derived from the Abu Dhabi Global Markets (ADGM) financial regulation document collection, design a baseline Regulatory Information Retrieval and Answer Generation system, and evaluate it with RePASs, a novel evaluation metric that tests whether generated answers accurately capture all relevant obligations and avoid contradictions.

We study the impact on mechanisms for facility location of moving from one dimension to two (or more) dimensions and Euclidean or Manhattan distances. We consider three fundamental axiomatic properties: anonymity which is a basic fairness property, Pareto optimality which is one of the most important efficiency properties, and strategy proofness which ensures agents do not have an incentive to mis-report. We also consider how well such mechanisms can approximate the optimal welfare. Our results are somewhat negative. Moving from one dimension to two (or more) dimensions often makes these axiomatic properties more difficult to achieve. For example, with two facilities in Euclidean space or with just a single facility in Manhattan space, no mechanism is anonymous, Pareto optimal and strategy proof. By contrast, mechanisms on the line exist with all three properties.We also show that approximation ratios may increase when moving to two (or more) dimensions. All our impossibility results are minimal. If we drop one of the three axioms (anonymity, Pareto optimality or strategy proofness) multiple mechanisms satisfy the other two axioms.

The growing need for accountability of the people behind AI systems can be addressed by leveraging processes in three fields of study: ethics, law, and computer science. While these fields are often considered in isolation, they rely on complementary notions in their interpretation and implementation. In this work, we detail this interdependence and motivate the necessary role of collaborative governance tools in shaping a positive evolution of AI. We first contrast notions of compliance in the ethical, legal, and technical fields; we outline both their differences and where they complement each other, with a particular focus on the roles of ethical charters, licenses, and technical documentation in these interactions. We then focus on the role of values in articulating the synergies between the fields and outline specific mechanisms of interaction between them in practice. We identify how these mechanisms have played out in several open governance fora: an open collaborative workshop, a responsible licensing initiative, and a proposed regulatory framework. By leveraging complementary notions of compliance in these three domains, we can create a more comprehensive framework for governing AI systems that jointly takes into account their technical capabilities, their impact on society, and how technical specifications can inform relevant regulations. Our analysis thus underlines the necessity of joint consideration of the ethical, legal, and technical in AI ethics frameworks to be used on a larger scale to govern AI systems and how the thinking in each of these areas can inform the others.

Existing regulatory frameworks for biomedical AI include robustness as a key component but lack detailed implementational guidance. The recent rise of biomedical foundation models creates new hurdles in testing and certification given their broad capabilities and susceptibility to complex distribution shifts. To balance test feasibility and effectiveness, we suggest a priority-based, task-oriented approach to tailor robustness evaluation objectives to a predefined specification. We urge concrete policies to adopt a granular categorization of robustness concepts in the specification. Our approach promotes the standardization of risk assessment and monitoring, which guides technical developments and mitigation efforts.

In the context of reinforcement learning from human feedback (RLHF), the reward function is generally derived from maximum likelihood estimation of a random utility model based on pairwise comparisons made by humans. The problem of learning a reward function is one of preference aggregation that, we argue, largely falls within the scope of social choice theory. From this perspective, we can evaluate different aggregation methods via established axioms, examining whether these methods meet or fail well-known standards. We demonstrate that both the Bradley-Terry-Luce Model and its broad generalizations fail to meet basic axioms. In response, we develop novel rules for learning reward functions with strong axiomatic guarantees. A key innovation from the standpoint of social choice is that our problem has a linear structure, which greatly restricts the space of feasible rules and leads to a new paradigm that we call linear social choice.

Advanced AI models hold the promise of tremendous benefits for humanity, but society needs to proactively manage the accompanying risks. In this paper, we focus on what we term "frontier AI" models: highly capable foundation models that could possess dangerous capabilities sufficient to pose severe risks to public safety. Frontier AI models pose a distinct regulatory challenge: dangerous capabilities can arise unexpectedly; it is difficult to robustly prevent a deployed model from being misused; and, it is difficult to stop a model's capabilities from proliferating broadly. To address these challenges, at least three building blocks for the regulation of frontier models are needed: (1) standard-setting processes to identify appropriate requirements for frontier AI developers, (2) registration and reporting requirements to provide regulators with visibility into frontier AI development processes, and (3) mechanisms to ensure compliance with safety standards for the development and deployment of frontier AI models. Industry self-regulation is an important first step. However, wider societal discussions and government intervention will be needed to create standards and to ensure compliance with them. We consider several options to this end, including granting enforcement powers to supervisory authorities and licensure regimes for frontier AI models. Finally, we propose an initial set of safety standards. These include conducting pre-deployment risk assessments; external scrutiny of model behavior; using risk assessments to inform deployment decisions; and monitoring and responding to new information about model capabilities and uses post-deployment. We hope this discussion contributes to the broader conversation on how to balance public safety risks and innovation benefits from advances at the frontier of AI development.

As a vital stage of automated rule checking (ARC), rule interpretation of regulatory texts requires considerable effort. However, interpreting regulatory clauses with implicit properties or complex computational logic is still challenging due to the lack of domain knowledge and limited expressibility of conventional logic representations. Thus, LLM-FuncMapper, an approach to identifying predefined functions needed to interpret various regulatory clauses based on the large language model (LLM), is proposed. First, by systematically analysis of building codes, a series of atomic functions are defined to capture shared computational logics of implicit properties and complex constraints, creating a database of common blocks for interpreting regulatory clauses. Then, a prompt template with the chain of thought is developed and further enhanced with a classification-based tuning strategy, to enable common LLMs for effective function identification. Finally, the proposed approach is validated with statistical analysis, experiments, and proof of concept. Statistical analysis reveals a long-tail distribution and high expressibility of the developed function database, with which almost 100% of computer-processible clauses can be interpreted and represented as computer-executable codes. Experiments show that LLM-FuncMapper achieve promising results in identifying relevant predefined functions for rule interpretation. Further proof of concept in automated rule interpretation also demonstrates the possibility of LLM-FuncMapper in interpreting complex regulatory clauses. To the best of our knowledge, this study is the first attempt to introduce LLM for understanding and interpreting complex regulatory clauses, which may shed light on further adoption of LLM in the construction domain.

Trustworthy Artificial Intelligence (AI) is based on seven technical requirements sustained over three main pillars that should be met throughout the system's entire life cycle: it should be (1) lawful, (2) ethical, and (3) robust, both from a technical and a social perspective. However, attaining truly trustworthy AI concerns a wider vision that comprises the trustworthiness of all processes and actors that are part of the system's life cycle, and considers previous aspects from different lenses. A more holistic vision contemplates four essential axes: the global principles for ethical use and development of AI-based systems, a philosophical take on AI ethics, a risk-based approach to AI regulation, and the mentioned pillars and requirements. The seven requirements (human agency and oversight; robustness and safety; privacy and data governance; transparency; diversity, non-discrimination and fairness; societal and environmental wellbeing; and accountability) are analyzed from a triple perspective: What each requirement for trustworthy AI is, Why it is needed, and How each requirement can be implemented in practice. On the other hand, a practical approach to implement trustworthy AI systems allows defining the concept of responsibility of AI-based systems facing the law, through a given auditing process. Therefore, a responsible AI system is the resulting notion we introduce in this work, and a concept of utmost necessity that can be realized through auditing processes, subject to the challenges posed by the use of regulatory sandboxes. Our multidisciplinary vision of trustworthy AI culminates in a debate on the diverging views published lately about the future of AI. Our reflections in this matter conclude that regulation is a key for reaching a consensus among these views, and that trustworthy and responsible AI systems will be crucial for the present and future of our society.

For text-based AI systems to interact in the real world, causal reasoning is an essential skill. Since interventional data is costly to generate, we study to what extent an agent can learn causal reasoning from passive data. Specifically, we consider an axiomatic training setup where an agent learns from multiple demonstrations of a causal axiom (or rule), rather than incorporating the axiom as an inductive bias or inferring it from data values. A key question is whether the agent would learn to generalize from the axiom demonstrations to new scenarios. For example, if a transformer model is trained on demonstrations of the causal transitivity axiom over small graphs, would it generalize to applying the transitivity axiom over large graphs? Our results, based on a novel axiomatic training scheme, indicate that such generalization is possible. We consider the task of inferring whether a variable causes another variable, given a causal graph structure. We find that a 67 million parameter transformer model, when trained on linear causal chains (along with some noisy variations) can generalize well to new kinds of graphs, including longer causal chains, causal chains with reversed order, and graphs with branching; even when it is not explicitly trained for such settings. Our model performs at par (or even better) than many larger language models such as GPT-4, Gemini Pro, and Phi-3. Overall, our axiomatic training framework provides a new paradigm of learning causal reasoning from passive data that can be used to learn arbitrary axioms, as long as sufficient demonstrations can be generated.

We focus on a simple, one-dimensional collective decision problem (often referred to as the facility location problem) and explore issues of strategyproofness and proportionality-based fairness. We introduce and analyze a hierarchy of proportionality-based fairness axioms of varying strength: Individual Fair Share (IFS), Unanimous Fair Share (UFS), Proportionality (as in Freeman et al, 2021), and Proportional Fairness (PF). For each axiom, we characterize the family of mechanisms that satisfy the axiom and strategyproofness. We show that imposing strategyproofness renders many of the axioms to be equivalent: the family of mechanisms that satisfy proportionality, unanimity, and strategyproofness is equivalent to the family of mechanisms that satisfy UFS and strategyproofness, which, in turn, is equivalent to the family of mechanisms that satisfy PF and strategyproofness. Furthermore, there is a unique such mechanism: the Uniform Phantom mechanism, which is studied in Freeman et al. (2021). We also characterize the outcomes of the Uniform Phantom mechanism as the unique (pure) equilibrium outcome for any mechanism that satisfies continuity, strict monotonicity, and UFS. Finally, we analyze the approximation guarantees, in terms of optimal social welfare and minimum total cost, obtained by mechanisms that are strategyproof and satisfy each proportionality-based fairness axiom. We show that the Uniform Phantom mechanism provides the best approximation of the optimal social welfare (and also minimum total cost) among all mechanisms that satisfy UFS.

This paper reviews Trustworthy Artificial Intelligence (TAI) and its various definitions. Considering the principles respected in any society, TAI is often characterized by a few attributes, some of which have led to confusion in regulatory or engineering contexts. We argue against using terms such as Responsible or Ethical AI as substitutes for TAI. And to help clarify any confusion, we suggest leaving them behind. Given the subjectivity and complexity inherent in TAI, developing a universal framework is deemed infeasible. Instead, we advocate for approaches centered on addressing key attributes and properties such as fairness, bias, risk, security, explainability, and reliability. We examine the ongoing regulatory landscape, with a focus on initiatives in the EU, China, and the USA. We recognize that differences in AI regulations based on geopolitical and geographical reasons pose an additional challenge for multinational companies. We identify risk as a core factor in AI regulation and TAI. For example, as outlined in the EU-AI Act, organizations must gauge the risk level of their AI products to act accordingly (or risk hefty fines). We compare modalities of TAI implementation and how multiple cross-functional teams are engaged in the overall process. Thus, a brute force approach for enacting TAI renders its efficiency and agility, moot. To address this, we introduce our framework Set-Formalize-Measure-Act (SFMA). Our solution highlights the importance of transforming TAI-aware metrics, drivers of TAI, stakeholders, and business/legal requirements into actual benchmarks or tests. Finally, over-regulation driven by panic of powerful AI models can, in fact, harm TAI too. Based on GitHub user-activity data, in 2023, AI open-source projects rose to top projects by contributor account. Enabling innovation in TAI hinges on the independent contributions of the open-source community.

There is increasing attention being given to how to regulate AI systems. As governing bodies grapple with what values to encapsulate into regulation, we consider the technical half of the question: To what extent can AI experts vet an AI system for adherence to regulatory requirements? We investigate this question through two public sector procurement checklists, identifying what we can do now, what we should be able to do with technical innovation in AI, and what requirements necessitate a more interdisciplinary approach.

We study the problem of attributing the prediction of a deep network to its input features, a problem previously studied by several other works. We identify two fundamental axioms---Sensitivity and Implementation Invariance that attribution methods ought to satisfy. We show that they are not satisfied by most known attribution methods, which we consider to be a fundamental weakness of those methods. We use the axioms to guide the design of a new attribution method called Integrated Gradients. Our method requires no modification to the original network and is extremely simple to implement; it just needs a few calls to the standard gradient operator. We apply this method to a couple of image models, a couple of text models and a chemistry model, demonstrating its ability to debug networks, to extract rules from a network, and to enable users to engage with models better.

Our research endeavors to advance the concept of responsible artificial intelligence (AI), a topic of increasing importance within EU policy discussions. The EU has recently issued several publications emphasizing the necessity of trust in AI, underscoring the dual nature of AI as both a beneficial tool and a potential weapon. This dichotomy highlights the urgent need for international regulation. Concurrently, there is a need for frameworks that guide companies in AI development, ensuring compliance with such regulations. Our research aims to assist lawmakers and machine learning practitioners in navigating the evolving landscape of AI regulation, identifying focal areas for future attention. This paper introduces a comprehensive and, to our knowledge, the first unified definition of responsible AI. Through a structured literature review, we elucidate the current understanding of responsible AI. Drawing from this analysis, we propose an approach for developing a future framework centered around this concept. Our findings advocate for a human-centric approach to Responsible AI. This approach encompasses the implementation of AI methods with a strong emphasis on ethics, model explainability, and the pillars of privacy, security, and trust.

This position paper emphasizes the critical gap in the evaluation of Explainable AI (XAI) due to the lack of standardized and reliable metrics, which diminishes its practical value, trustworthiness, and ability to meet regulatory requirements. Current evaluation methods are often fragmented, subjective, and biased, making them prone to manipulation and complicating the assessment of complex models. A central issue is the absence of a ground truth for explanations, complicating comparisons across various XAI approaches. To address these challenges, we advocate for widespread research into developing robust, context-sensitive evaluation metrics. These metrics should be resistant to manipulation, relevant to each use case, and based on human judgment and real-world applicability. We also recommend creating domain-specific evaluation benchmarks that align with the user and regulatory needs of sectors such as healthcare and finance. By encouraging collaboration among academia, industry, and regulators, we can create standards that balance flexibility and consistency, ensuring XAI explanations are meaningful, trustworthy, and compliant with evolving regulations.

Cryptocurrencies have evolved into an important asset class, providing a variety of benefits. However, they also present significant risks, such as market volatility and the potential for misuse in illegal activities. These risks underline the urgent need for a comprehensive regulatory framework to ensure consumer protection, market integrity, and financial stability. Yet, the global landscape of cryptocurrency regulation remains complex, marked by substantial variations in regulatory frameworks among different countries. This paper aims to study these differences by investigating the regulatory landscapes across various jurisdictions. We first discuss regulatory challenges and considerations, and then conduct a comparative analysis of international regulatory stances, approaches, and measures. We hope our study offers practical insights to enhance the understanding of global trends in cryptocurrency regulation.

This paper argues that market governance mechanisms should be considered a key approach in the governance of artificial intelligence (AI), alongside traditional regulatory frameworks. While current governance approaches have predominantly focused on regulation, we contend that market-based mechanisms offer effective incentives for responsible AI development. We examine four emerging vectors of market governance: insurance, auditing, procurement, and due diligence, demonstrating how these mechanisms can affirm the relationship between AI risk and financial risk while addressing capital allocation inefficiencies. While we do not claim that market forces alone can adequately protect societal interests, we maintain that standardised AI disclosures and market mechanisms can create powerful incentives for safe and responsible AI development. This paper urges regulators, economists, and machine learning researchers to investigate and implement market-based approaches to AI governance.

As autonomous AI agents are used in regulated and safety-critical settings, organizations need effective ways to turn policy into enforceable controls. We introduce a regulatory machine learning framework that converts unstructured design artifacts (like PRDs, TDDs, and code) into verifiable runtime guardrails. Our Policy as Prompt method reads these documents and risk controls to build a source-linked policy tree. This tree is then compiled into lightweight, prompt-based classifiers for real-time runtime monitoring. The system is built to enforce least privilege and data minimization. For conformity assessment, it provides complete provenance, traceability, and audit logging, all integrated with a human-in-the-loop review process. Evaluations show our system reduces prompt-injection risk, blocks out-of-scope requests, and limits toxic outputs. It also generates auditable rationales aligned with AI governance frameworks. By treating policies as executable prompts (a policy-as-code for agents), this approach enables secure-by-design deployment, continuous compliance, and scalable AI safety and AI security assurance for regulatable ML.

The integration of AI agents into economic markets fundamentally alters the landscape of strategic interaction. We investigate the economic implications of expanding the set of available technologies in three canonical game-theoretic settings: bargaining (resource division), negotiation (asymmetric information trade), and persuasion (strategic information transmission). We find that simply increasing the choice of AI delegates can drastically shift equilibrium payoffs and regulatory outcomes, often creating incentives for regulators to proactively develop and release technologies. Conversely, we identify a strategic phenomenon termed the "Poisoned Apple" effect: an agent may release a new technology, which neither they nor their opponent ultimately uses, solely to manipulate the regulator's choice of market design in their favor. This strategic release improves the releaser's welfare at the expense of their opponent and the regulator's fairness objectives. Our findings demonstrate that static regulatory frameworks are vulnerable to manipulation via technology expansion, necessitating dynamic market designs that adapt to the evolving landscape of AI capabilities.

Recent work in probability-domain knowledge distillation has established axiomatic frameworks for temperature scaling, multi-teacher aggregation, and bias-variance trade-offs in single-stage settings. However, the mathematical behavior of recursive or multi-generation distillation remains poorly understood, with prior approaches relying primarily on empirical heuristics. In this work, we introduce an axiomatic and operator-theoretic framework for recursive meta-distillation, formalizing iterative knowledge distillation as a sequence of probability-distribution operators with explicit anchoring to base teachers. We define structural axioms for valid meta-teacher construction and prove the existence of non-trivial operator families satisfying these axioms without specifying particular algorithms or loss functions. Under mild realizability and convexity assumptions, we show that anchored recursive distillation induces contraction in KL divergence, yielding geometric convergence to base teacher distributions and a unique, globally attractive fixed point. The contribution is foundational rather than algorithmic: the framework characterizes when recursive distillation is mathematically well-posed and convergent rather than error-accumulating, independent of model architecture, optimization details, or specific operator instantiations. These results provide a theoretical basis for understanding stability, bias-variance behavior, and failure modes in iterative and multi-teacher distillation under capacity constraints.

We consider the obnoxious facility location problem (in which agents prefer the facility location to be far from them) and propose a hierarchy of distance-based proportional fairness concepts for the problem. These fairness axioms ensure that groups of agents at the same location are guaranteed to be a distance from the facility proportional to their group size. We consider deterministic and randomized mechanisms, and compute tight bounds on the price of proportional fairness. In the deterministic setting, we show that our proportional fairness axioms are incompatible with strategyproofness, and prove asymptotically tight epsilon-price of anarchy and stability bounds for proportionally fair welfare-optimal mechanisms. In the randomized setting, we identify proportionally fair and strategyproof mechanisms that give an expected welfare within a constant factor of the optimal welfare. Finally, we prove existence results for two extensions to our model.

Major scandals in corporate history have urged the need for regulatory compliance, where organizations need to ensure that their controls (processes) comply with relevant laws, regulations, and policies. However, keeping track of the constantly changing legislation is difficult, thus organizations are increasingly adopting Regulatory Technology (RegTech) to facilitate the process. To this end, we introduce regulatory information retrieval (REG-IR), an application of document-to-document information retrieval (DOC2DOC IR), where the query is an entire document making the task more challenging than traditional IR where the queries are short. Furthermore, we compile and release two datasets based on the relationships between EU directives and UK legislation. We experiment on these datasets using a typical two-step pipeline approach comprising a pre-fetcher and a neural re-ranker. Experimenting with various pre-fetchers from BM25 to k nearest neighbors over representations from several BERT models, we show that fine-tuning a BERT model on an in-domain classification task produces the best representations for IR. We also show that neural re-rankers under-perform due to contradicting supervision, i.e., similar query-document pairs with opposite labels. Thus, they are biased towards the pre-fetcher's score. Interestingly, applying a date filter further improves the performance, showcasing the importance of the time dimension.

Building on the probability-domain distillation framework of Sparse-KD, we develop an axiomatic, operator-theoretic framework for multi-teacher ensemble knowledge distillation. Rather than prescribing a specific aggregation formula, we define five core axioms governing valid knowledge aggregation operators, encompassing convexity, positivity, continuity, weight monotonicity, and temperature coherence. We prove the existence and non-uniqueness of operator families satisfying these axioms, establishing that multiple distinct aggregation mechanisms conform to the same foundational principles. Within this framework, we establish operator-agnostic guarantees showing that multi-teacher aggregation reduces both stochastic variance and systematic supervisory bias under heterogeneous teachers, while providing Jensen-type bounds, log-loss guarantees, and safety attenuation properties. For aggregation operators linear in teacher weights, we further establish classical ensemble variance-reduction results under standard independence assumptions, with extensions to correlated-error regimes. The framework provides theoretical grounding for multi-teacher distillation from diverse frontier models while admitting multiple valid implementation strategies.

Policy Compliance Detection (PCD) is a task we encounter when reasoning over texts, e.g. legal frameworks. Previous work to address PCD relies heavily on modeling the task as a special case of Recognizing Textual Entailment. Entailment is applicable to the problem of PCD, however viewing the policy as a single proposition, as opposed to multiple interlinked propositions, yields poor performance and lacks explainability. To address this challenge, more recent proposals for PCD have argued for decomposing policies into expression trees consisting of questions connected with logic operators. Question answering is used to obtain answers to these questions with respect to a scenario. Finally, the expression tree is evaluated in order to arrive at an overall solution. However, this work assumes expression trees are provided by experts, thus limiting its applicability to new policies. In this work, we learn how to infer expression trees automatically from policy texts. We ensure the validity of the inferred trees by introducing constrained decoding using a finite state automaton to ensure the generation of valid trees. We determine through automatic evaluation that 63% of the expression trees generated by our constrained generation model are logically equivalent to gold trees. Human evaluation shows that 88% of trees generated by our model are correct.

Foundation models (FMs) provide societal benefits but also amplify risks. Governments, companies, and researchers have proposed regulatory frameworks, acceptable use policies, and safety benchmarks in response. However, existing public benchmarks often define safety categories based on previous literature, intuitions, or common sense, leading to disjointed sets of categories for risks specified in recent regulations and policies, which makes it challenging to evaluate and compare FMs across these benchmarks. To bridge this gap, we introduce AIR-Bench 2024, the first AI safety benchmark aligned with emerging government regulations and company policies, following the regulation-based safety categories grounded in our AI risks study, AIR 2024. AIR 2024 decomposes 8 government regulations and 16 company policies into a four-tiered safety taxonomy with 314 granular risk categories in the lowest tier. AIR-Bench 2024 contains 5,694 diverse prompts spanning these categories, with manual curation and human auditing to ensure quality. We evaluate leading language models on AIR-Bench 2024, uncovering insights into their alignment with specified safety concerns. By bridging the gap between public benchmarks and practical AI risks, AIR-Bench 2024 provides a foundation for assessing model safety across jurisdictions, fostering the development of safer and more responsible AI systems.

Regulatory texts are inherently long and complex, presenting significant challenges for information retrieval systems in supporting regulatory officers with compliance tasks. This paper introduces a hybrid information retrieval system that combines lexical and semantic search techniques to extract relevant information from large regulatory corpora. The system integrates a fine-tuned sentence transformer model with the traditional BM25 algorithm to achieve both semantic precision and lexical coverage. To generate accurate and comprehensive responses, retrieved passages are synthesized using Large Language Models (LLMs) within a Retrieval Augmented Generation (RAG) framework. Experimental results demonstrate that the hybrid system significantly outperforms standalone lexical and semantic approaches, with notable improvements in Recall@10 and MAP@10. By openly sharing our fine-tuned model and methodology, we aim to advance the development of robust natural language processing tools for compliance-driven applications in regulatory domains.

Large language models have achieved near-expert performance in structured reasoning domains like mathematics and programming, yet their ability to perform compositional multi-hop reasoning in specialized scientific fields remains limited. We propose a bottom-up learning paradigm in which models are grounded in axiomatic domain facts and compose them to solve complex, unseen tasks. To this end, we present a post-training pipeline, based on a combination of supervised fine-tuning and reinforcement learning (RL), in which knowledge graphs act as implicit reward models. By deriving novel reward signals from knowledge graph paths, we provide verifiable, scalable, and grounded supervision that encourages models to compose intermediate axioms rather than optimize only final answers during RL. We validate this approach in the medical domain, training a 14B model on short-hop reasoning paths (1-3 hops) and evaluating its zero-shot generalization to complex multi-hop queries (4-5 hops). Our experiments show that path-derived rewards act as a "compositional bridge", enabling our model to significantly outperform much larger models and frontier systems like GPT-5.2 and Gemini 3 Pro, on the most difficult reasoning tasks. Furthermore, we demonstrate the robustness of our approach to adversarial perturbations against option-shuffling stress tests. This work suggests that grounding the reasoning process in structured knowledge is a scalable and efficient path toward intelligent reasoning.

Organizations of all sizes, across all industries and domains are leveraging artificial intelligence (AI) technologies to solve some of their biggest challenges around operations, customer experience, and much more. However, due to the probabilistic nature of AI, the risks associated with it are far greater than traditional technologies. Research has shown that these risks can range anywhere from regulatory, compliance, reputational, and user trust, to financial and even societal risks. Depending on the nature and size of the organization, AI technologies can pose a significant risk, if not used in a responsible way. This position paper seeks to present a brief introduction to AI governance, which is a framework designed to oversee the responsible use of AI with the goal of preventing and mitigating risks. Having such a framework will not only manage risks but also gain maximum value out of AI projects and develop consistency for organization-wide adoption of AI.

Recent AI algorithms are blackbox models whose decisions are difficult to interpret. eXplainable AI (XAI) seeks to address lack of AI interpretability and trust by explaining to customers their AI decision, e.g., decision to reject a loan application. The common wisdom is that regulating AI by mandating fully transparent XAI leads to greater social welfare. This paper challenges this notion through a game theoretic model for a policy-maker who maximizes social welfare, firms in a duopoly competition that maximize profits, and heterogenous consumers. The results show that XAI regulation may be redundant. In fact, mandating fully transparent XAI may make firms and customers worse off. This reveals a trade-off between maximizing welfare and receiving explainable AI outputs. We also discuss managerial implications for policy-maker and firms.

In Natural Language Processing (NLP), the Elo rating system, originally designed for ranking players in dynamic games such as chess, is increasingly being used to evaluate Large Language Models (LLMs) through "A vs B" paired comparisons. However, while popular, the system's suitability for assessing entities with constant skill levels, such as LLMs, remains relatively unexplored. We study two fundamental axioms that evaluation methods should adhere to: reliability and transitivity. We conduct extensive evaluation of Elo behaviour, illustrating that individual Elo computations exhibit volatility and delving into the impact of varying the Elo rating system's hyperparameters. We show that these axioms are not always satisfied raising questions about the reliability of current comparative evaluations of LLMs. If the current use of Elo scores is intended to substitute the costly head-to-head comparison of LLMs, it is crucial to ensure the ranking is as robust as possible. Guided by the axioms, our findings offer concrete guidelines for enhancing the reliability of LLM evaluation methods, suggesting a need for reassessment of existing comparative approaches.

This paper examines how competing sociotechnical imaginaries of artificial intelligence (AI) risk shape governance decisions and regulatory constraints. Drawing on concepts from science and technology studies, we analyse three dominant narrative groups: existential risk proponents, who emphasise catastrophic AGI scenarios; accelerationists, who portray AI as a transformative force to be unleashed; and critical AI scholars, who foreground present-day harms rooted in systemic inequality. Through an analysis of representative manifesto-style texts, we explore how these imaginaries differ across four dimensions: normative visions of the future, diagnoses of the present social order, views on science and technology, and perceived human agency in managing AI risks. Our findings reveal how these narratives embed distinct assumptions about risk and have the potential to progress into policy-making processes by narrowing the space for alternative governance approaches. We argue against speculative dogmatism and for moving beyond deterministic imaginaries toward regulatory strategies that are grounded in pragmatism.

This paper introduces ArGen (Auto-Regulation of Generative AI systems), a framework for aligning Large Language Models (LLMs) with complex sets of configurable, machine-readable rules spanning ethical principles, operational safety protocols, and regulatory compliance standards. Moving beyond just preference-based alignment, ArGen is designed to ensure LLMs adhere to these multifaceted policies through a novel synthesis of principle-based automated reward scoring, Group Relative Policy Optimisation (GRPO), and an Open Policy Agent (OPA) inspired governance layer. This approach provides the technical foundation for achieving and demonstrating compliance with diverse and nuanced governance requirements. To showcase the framework's capability to operationalize a deeply nuanced and culturally-specific value system, we present an in-depth case study: the development of a medical AI assistant guided by principles from Dharmic ethics (such as Ahimsa and Dharma), as derived from texts like the Bhagavad Gita. This challenging application demonstrates ArGen's adaptability, achieving a 70.9% improvement in domain-scope adherence over the baseline. Through our open-source repository, we show that ArGen's methodology offers a path to 'Governable Al' systems that are technically proficient, ethically robust, and verifiably compliant for safe deployment in diverse global contexts.

The rapid deployment of AI systems in high-stakes domains, including those classified as high-risk under the The EU AI Act (Regulation (EU) 2024/1689), has intensified the need for reliable compliance auditing. For binary classifiers, regulatory risk assessment often relies on global fairness metrics such as the Disparate Impact ratio, widely used to evaluate potential discrimination. In typical auditing settings, the auditee provides a subset of its dataset to an auditor, while a supervisory authority may verify whether this subset is representative of the full underlying distribution. In this work, we investigate to what extent a malicious auditee can construct a fairness-compliant yet representative-looking sample from a non-compliant original distribution, thereby creating an illusion of fairness. We formalize this problem as a constrained distributional projection task and introduce mathematically grounded manipulation strategies based on entropic and optimal transport projections. These constructions characterize the minimal distributional shift required to satisfy fairness constraints. To counter such attacks, we formalize representativeness through distributional distance based statistical tests and systematically evaluate their ability to detect manipulated samples. Our analysis highlights the conditions under which fairness manipulation can remain statistically undetected and provides practical guidelines for strengthening supervisory verification. We validate our theoretical findings through experiments on standard tabular datasets for bias detection. Code is publicly available at https://github.com/ValentinLafargue/Inspection.

AI agents -- systems that can independently take actions to pursue complex goals with only limited human oversight -- have entered the mainstream. These systems are now being widely used to produce software, conduct business activities, and automate everyday personal tasks. While AI agents implicate many areas of law, ranging from agency law and contracts to tort liability and labor law, they present particularly pressing questions for the most globally consequential AI regulation: the European Union's AI Act. Promulgated prior to the development and widespread use of AI agents, the EU AI Act faces significant obstacles in confronting the governance challenges arising from this transformative technology, such as performance failures in autonomous task execution, the risk of misuse of agents by malicious actors, and unequal access to the economic opportunities afforded by AI agents. We systematically analyze the EU AI Act's response to these challenges, focusing on both the substantive provisions of the regulation and, crucially, the institutional frameworks that aim to support its implementation. Our analysis of the Act's allocation of monitoring and enforcement responsibilities, reliance on industry self-regulation, and level of government resourcing illustrates how a regulatory framework designed for conventional AI systems can be ill-suited to AI agents. Taken together, our findings suggest that policymakers in the EU and beyond will need to change course, and soon, if they are to effectively govern the next generation of AI technology.

Reasoning with complex, context-specific rules remains challenging for large language models (LLMs). In legal and policy settings, this manifests as deontic reasoning: reasoning about obligations, permissions, and prohibitions under explicit rules. While many recent benchmarks emphasize short-context mathematical reasoning, fewer focus on long-context, high-stakes deontic reasoning. To address this gap, we introduce DEONTICBENCH, a benchmark of 6,232 tasks across U.S. federal taxes, airline baggage policies, U.S. immigration administration, and U.S. state housing law. These tasks can be approached in multiple ways, including direct reasoning in language or with the aid of symbolic computation. Besides free-form chain-of-thought reasoning, DEONTICBENCH enables an optional solver-based workflow in which models translate statutes and case facts into executable Prolog, leading to formal problem interpretations and an explicit program trace. We release reference Prolog programs for all instances. Across frontier LLMs and coding models, best hard-subset performance reaches only 44.4% on SARA Numeric and 46.6 macro-F1 on Housing. We further study training with supervised fine-tuning and reinforcement learning for symbolic program generation. Although training improves Prolog generation quality, current RL methods still fail to solve these tasks reliably. Overall, DEONTICBENCH provides a benchmark for studying context-grounded rule reasoning in real-world domains under both symbolic and non-symbolic settings.

Applications of Generative AI (Gen AI) are expected to revolutionize a number of different areas, ranging from science & medicine to education. The potential for these seismic changes has triggered a lively debate about the potential risks of the technology, and resulted in calls for tighter regulation, in particular from some of the major tech companies who are leading in AI development. This regulation is likely to put at risk the budding field of open-source generative AI. Using a three-stage framework for Gen AI development (near, mid and long-term), we analyze the risks and opportunities of open-source generative AI models with similar capabilities to the ones currently available (near to mid-term) and with greater capabilities (long-term). We argue that, overall, the benefits of open-source Gen AI outweigh its risks. As such, we encourage the open sourcing of models, training and evaluation data, and provide a set of recommendations and best practices for managing risks associated with open-source generative AI.

This paper investigates the application of Deep Reinforcement Learning (DRL) for Environment, Social, and Governance (ESG) financial portfolio management, with a specific focus on the potential benefits of ESG score-based market regulation. We leveraged an Advantage Actor-Critic (A2C) agent and conducted our experiments using environments encoded within the OpenAI Gym, adapted from the FinRL platform. The study includes a comparative analysis of DRL agent performance under standard Dow Jones Industrial Average (DJIA) market conditions and a scenario where returns are regulated in line with company ESG scores. In the ESG-regulated market, grants were proportionally allotted to portfolios based on their returns and ESG scores, while taxes were assigned to portfolios below the mean ESG score of the index. The results intriguingly reveal that the DRL agent within the ESG-regulated market outperforms the standard DJIA market setup. Furthermore, we considered the inclusion of ESG variables in the agent state space, and compared this with scenarios where such data were excluded. This comparison adds to the understanding of the role of ESG factors in portfolio management decision-making. We also analyze the behaviour of the DRL agent in IBEX 35 and NASDAQ-100 indexes. Both the A2C and Proximal Policy Optimization (PPO) algorithms were applied to these additional markets, providing a broader perspective on the generalization of our findings. This work contributes to the evolving field of ESG investing, suggesting that market regulation based on ESG scoring can potentially improve DRL-based portfolio management, with significant implications for sustainable investing strategies.

The accelerating deployment of artificial intelligence systems across regulated sectors has exposed critical fragmentation in risk assessment methodologies. A significant "language barrier" currently separates technical security teams, who focus on algorithmic vulnerabilities (e.g., MITRE ATLAS), from legal and compliance professionals, who address regulatory mandates (e.g., EU AI Act, NIST AI RMF). This disciplinary disconnect prevents the accurate translation of technical vulnerabilities into financial liability, leaving practitioners unable to answer fundamental economic questions regarding contingency reserves, control return-on-investment, and insurance exposure. To bridge this gap, this research presents the AI System Threat Vector Taxonomy, a structured ontology designed explicitly for Quantitative Risk Assessment (QRA). The framework categorizes AI-specific risks into nine critical domains: Misuse, Poisoning, Privacy, Adversarial, Biases, Unreliable Outputs, Drift, Supply Chain, and IP Threat, integrating 53 operationally defined sub-threats. Uniquely, each domain maps technical vectors directly to business loss categories (Confidentiality, Integrity, Availability, Legal, Reputation), enabling the translation of abstract threats into measurable financial impact. The taxonomy is empirically validated through an analysis of 133 documented AI incidents from 2025 (achieving 100% classification coverage) and reconciled against the main AI risk frameworks. Furthermore, it is explicitly aligned with ISO/IEC 42001 controls and NIST AI RMF functions to facilitate auditability.

The scarcity of high-quality, logically sound data is a critical bottleneck for advancing the mathematical reasoning of Large Language Models (LLMs). Our work confronts this challenge by turning decades of automated theorem proving research into a scalable data engine. Rather than relying on error-prone LLMs or complex proof-assistant syntax like Lean and Isabelle, our framework leverages E-prover's saturation capabilities on the vast TPTP axiom library to derive a massive, guaranteed-valid corpus of theorems. Our pipeline is principled and simple: saturate axioms, filter for "interesting" theorems, and generate tasks. With no LLMs in the loop, we eliminate factual errors by construction. This purely symbolic data is then transformed into three difficulty-controlled challenges: entailment verification, premise selection, and proof reconstruction. Our zero-shot experiments on frontier models reveal a clear weakness: performance collapses on tasks requiring deep, structural reasoning. Our framework provides both the diagnostic tool to measure this gap and a scalable source of symbolic training data to address it. We make the code and data publicly available. https://github.com/sileod/reasoning_core https://hf.co/datasets/reasoning-core/rc1

Ensuring that Software Requirements Specifications (SRS) align with higher-level organizational or national requirements is vital, particularly in regulated environments such as finance and aerospace. In these domains, maintaining consistency, adhering to regulatory frameworks, minimizing errors, and meeting critical expectations are essential for the reliable functioning of systems. The widespread adoption of large language models (LLMs) highlights their immense potential, yet there remains considerable scope for improvement in retrieving relevant information and enhancing reasoning capabilities. This study demonstrates that integrating a robust Graph-RAG framework with advanced prompt engineering techniques, such as Chain of Thought and Tree of Thought, can significantly enhance performance. Compared to baseline RAG methods and simple prompting strategies, this approach delivers more accurate and context-aware results. While this method demonstrates significant improvements in performance, it comes with challenges. It is both costly and more complex to implement across diverse contexts, requiring careful adaptation to specific scenarios. Additionally, its effectiveness heavily relies on having complete and accurate input data, which may not always be readily available, posing further limitations to its scalability and practicality.

Drug shortages pose critical risks to patient care and healthcare systems worldwide, yet the effectiveness of regulatory interventions remains poorly understood due to information asymmetries in pharmaceutical supply chains. We propose ShortageSim, addresses this challenge by providing the first simulation framework that evaluates the impact of regulatory interventions on competition dynamics under information asymmetry. Using Large Language Model (LLM)-based agents, the framework models the strategic decisions of drug manufacturers and institutional buyers, in response to shortage alerts given by the regulatory agency. Unlike traditional game theory models that assume perfect rationality and complete information, ShortageSim simulates heterogeneous interpretations on regulatory announcements and the resulting decisions. Experiments on self-processed dataset of historical shortage events show that ShortageSim reduces the resolution lag for production disruption cases by up to 84\%, achieving closer alignment to real-world trajectories than the zero-shot baseline. Our framework confirms the effect of regulatory alert in addressing shortages and introduces a new method for understanding competition in multi-stage environments under uncertainty. We open-source ShortageSim and a dataset of 2,925 FDA shortage events, providing a novel framework for future research on policy design and testing in supply chains under information asymmetry.

The prevalence and importance of algorithmic two-sided marketplaces has drawn attention to the issue of fairness in such settings. Algorithmic decisions are used in assigning students to schools, users to advertisers, and applicants to job interviews. These decisions should heed the preferences of individuals, and simultaneously be fair with respect to their merits (synonymous with fit, future performance, or need). Merits conditioned on observable features are always uncertain, a fact that is exacerbated by the widespread use of machine learning algorithms to infer merit from the observables. As our key contribution, we carefully axiomatize a notion of individual fairness in the two-sided marketplace setting which respects the uncertainty in the merits; indeed, it simultaneously recognizes uncertainty as the primary potential cause of unfairness and an approach to address it. We design a linear programming framework to find fair utility-maximizing distributions over allocations, and we show that the linear program is robust to perturbations in the estimated parameters of the uncertain merit distributions, a key property in combining the approach with machine learning techniques.

Legal rules encompass not only codified statutes but also implicit adjudicatory principles derived from precedents that contain discretionary norms, social morality, and policy. While computational legal research has advanced in applying established rules to cases, inducing legal rules from judicial decisions remains understudied, constrained by limitations in model inference efficacy and symbolic reasoning capability. The advent of Large Language Models (LLMs) offers unprecedented opportunities for automating the extraction of such latent principles, yet progress is stymied by the absence of formal task definitions, benchmark datasets, and methodologies. To address this gap, we formalize Legal Rule Induction (LRI) as the task of deriving concise, generalizable doctrinal rules from sets of analogous precedents, distilling their shared preconditions, normative behaviors, and legal consequences. We introduce the first LRI benchmark, comprising 5,121 case sets (38,088 Chinese cases in total) for model tuning and 216 expert-annotated gold test sets. Experimental results reveal that: 1) State-of-the-art LLMs struggle with over-generalization and hallucination; 2) Training on our dataset markedly enhances LLMs capabilities in capturing nuanced rule patterns across similar cases.

This paper introduces a novel type theory and logic for probabilistic reasoning. Its logic is quantitative, with fuzzy predicates. It includes normalisation and conditioning of states. This conditioning uses a key aspect that distinguishes our probabilistic type theory from quantum type theory, namely the bijective correspondence between predicates and side-effect free actions (called instrument, or assert, maps). The paper shows how suitable computation rules can be derived from this predicate-action correspondence, and uses these rules for calculating conditional probabilities in two well-known examples of Bayesian reasoning in (graphical) models. Our type theory may thus form the basis for a mechanisation of Bayesian inference.

This paper presents the system description of our entry for the COLING 2025 RegNLP RIRAG (Regulatory Information Retrieval and Answer Generation) challenge, focusing on leveraging advanced information retrieval and answer generation techniques in regulatory domains. We experimented with a combination of embedding models, including Stella, BGE, CDE, and Mpnet, and leveraged fine-tuning and reranking for retrieving relevant documents in top ranks. We utilized a novel approach, LeSeR, which achieved competitive results with a recall@10 of 0.8201 and map@10 of 0.6655 for retrievals. This work highlights the transformative potential of natural language processing techniques in regulatory applications, offering insights into their capabilities for implementing a retrieval augmented generation system while identifying areas for future improvement in robustness and domain adaptation.

We present Ax-Prover, a multi-agent system for automated theorem proving in Lean that can solve problems across diverse scientific domains and operate either autonomously or collaboratively with human experts. To achieve this, Ax-Prover approaches scientific problem solving through formal proof generation, a process that demands both creative reasoning and strict syntactic rigor. Ax-Prover meets this challenge by equipping Large Language Models (LLMs), which provide knowledge and reasoning, with Lean tools via the Model Context Protocol (MCP), which ensure formal correctness. To evaluate its performance as an autonomous prover, we benchmark our approach against frontier LLMs and specialized prover models on two public math benchmarks and on two Lean benchmarks we introduce in the fields of abstract algebra and quantum theory. On public datasets, Ax-Prover is competitive with state-of-the-art provers, while it largely outperforms them on the new benchmarks. This shows that, unlike specialized systems that struggle to generalize, our tool-based agentic theorem prover approach offers a generalizable methodology for formal verification across diverse scientific domains. Furthermore, we demonstrate Ax-Prover's assistant capabilities in a practical use case, showing how it enabled an expert mathematician to formalize the proof of a complex cryptography theorem.

Current AI governance frameworks, including regulatory benchmarks for accuracy, latency, and energy efficiency, are built for static, centrally trained artificial neural networks on von Neumann hardware. NeuroAI systems, embodied in neuromorphic hardware and implemented via spiking neural networks, break these assumptions. This paper examines the limitations of current AI governance frameworks for NeuroAI, arguing that assurance and audit methods must co-evolve with these architectures, aligning traditional regulatory metrics with the physics, learning dynamics, and embodied efficiency of brain-inspired computation to enable technically grounded assurance.

Rule-based reasoning, a fundamental type of legal reasoning, enables us to draw conclusions by accurately applying a rule to a set of facts. We explore causal language models as rule-based reasoners, specifically with respect to compositional rules - rules consisting of multiple elements which form a complex logical expression. Reasoning about compositional rules is challenging because it requires multiple reasoning steps, and attending to the logical relationships between elements. We introduce a new prompting method, Chain of Logic, which elicits rule-based reasoning through decomposition (solving elements as independent threads of logic), and recomposition (recombining these sub-answers to resolve the underlying logical expression). This method was inspired by the IRAC (Issue, Rule, Application, Conclusion) framework, a sequential reasoning approach used by lawyers. We evaluate chain of logic across eight rule-based reasoning tasks involving three distinct compositional rules from the LegalBench benchmark and demonstrate it consistently outperforms other prompting methods, including chain of thought and self-ask, using open-source and commercial language models.

Recent research has demonstrated that feature attribution methods for deep networks can themselves be incorporated into training; these attribution priors optimize for a model whose attributions have certain desirable properties -- most frequently, that particular features are important or unimportant. These attribution priors are often based on attribution methods that are not guaranteed to satisfy desirable interpretability axioms, such as completeness and implementation invariance. Here, we introduce attribution priors to optimize for higher-level properties of explanations, such as smoothness and sparsity, enabled by a fast new attribution method formulation called expected gradients that satisfies many important interpretability axioms. This improves model performance on many real-world tasks where previous attribution priors fail. Our experiments show that the gains from combining higher-level attribution priors with expected gradients attributions are consistent across image, gene expression, and health care data sets. We believe this work motivates and provides the necessary tools to support the widespread adoption of axiomatic attribution priors in many areas of applied machine learning. The implementations and our results have been made freely available to academic communities.

Human feedback can prevent overtly harmful utterances in conversational models, but may not automatically mitigate subtle problematic behaviors such as a stated desire for self-preservation or power. Constitutional AI offers an alternative, replacing human feedback with feedback from AI models conditioned only on a list of written principles. We find this approach effectively prevents the expression of such behaviors. The success of simple principles motivates us to ask: can models learn general ethical behaviors from only a single written principle? To test this, we run experiments using a principle roughly stated as "do what's best for humanity". We find that the largest dialogue models can generalize from this short constitution, resulting in harmless assistants with no stated interest in specific motivations like power. A general principle may thus partially avoid the need for a long list of constitutions targeting potentially harmful behaviors. However, more detailed constitutions still improve fine-grained control over specific types of harms. This suggests both general and specific principles have value for steering AI safely.