Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already declare readOnly, idempotent, non-destructive, and closed-world behavior. The description adds substantial context beyond that: it is pure arithmetic with no I/O or external calls, results are rounded to 2 decimals, method-specific required parameters cause errors when missing, unknown methods return errors, and parameters for other methods are accepted and ignored.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Is the description appropriately sized, front-loaded, and free of redundancy?

The description is front-loaded: purpose and method selection come first, then usage routing, then per-method parameter requirements, then behavioral constraints. Every sentence earns its place for a multi-method tool with method-dependent parameters; there is no filler or repetition.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

For a tool with three distinct formulas, eight parameters, and method-dependent requirements, the description covers method selection, required and optional parameters per method, error conditions, I/O behavior, rounding, and sibling routing. With an output schema present, return format need not be explained, and nothing an agent needs to call it correctly is missing.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so each parameter is already documented in the input schema. The description still adds value by mapping parameters to specific methods (e.g., benchmark needs ip_type + industry; adjust needs base_royalty_rate + adjustment_factors; twenty_five_percent_rule needs licensee_expected_profit), clarifying that adjustment_factors multiply the base rate, and noting that other method parameters are ignored.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Does the description clearly state what the tool does and how it differs from similar tools?

The description states a specific verb+resource (royalty-rate analysis) and enumerates the three formulas it supports: benchmark, adjust, and the 25% rule. It distinguishes itself from siblings by naming valuation_income_methods, valuation_market_approach, and valuation_compliance as the tools for downstream application and transfer pricing.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Does the description explain when to use this tool, when not to, or what alternatives exist?

It explicitly says when to use this tool (to select and support a royalty rate before a relief-from-royalty or royalty-capitalization valuation) and when to use alternatives (valuation_income_methods, valuation_market_approach, valuation_compliance). The routing guidance is unambiguous and leaves nothing to inference.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.