Human to Logic Ratio

Arco's primary market selection metric — the proportion of a business's gross margin consumed by human labour costs, used to identify industries where the Operational Arbitrage available to an autonomous competitor is structurally large.

The Human-to-Logic Ratio measures how much of a market's value creation depends on human coordination rather than deterministic logic. In a high Human-to-Logic market, the incumbent's cost structure is dominated by wages, management overhead, and the coordination infrastructure required to keep human workers aligned. In a low Human-to-Logic market, technology or capital is already the primary cost driver, which means the arbitrage available to an autonomous competitor is smaller and the structural advantage harder to sustain.

First used: March 2026