The paper introduces the Distinguish-or-Homogenize principle, where an agent can either spend resources to differentiate between latent fault models or alter the system state so that the remaining models share a common acceptable policy, eliminating further diagnosis. This leads to the Last-Chance Policy Identification (LCPI) framework, which evaluates correctness at the reached state rather than the initial one, and defines the Last Identifiable Margin (LIM) as the boundary between distinguishing and homogenizing. For deterministic diagnostic graphs, an Exact-LIM recursion is provided, while for noisy finite-horizon recovery the authors propose Risk-Budgeted Compatibility Planning (RBCP), which searches a compatibility-aware frontier under a hard worst-case failure constraint, demonstrating improved risk-feasible recovery in microservice and MiniGrid scenarios.
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