Helen wrote:
Trial and error. Spike didn't know he wouldn't get the migraine attacking a demon until he did, didn't know he could spar effectively until they tried, and even used the 'chip test' to find out if Tara was demonic or not. He gave her a bloody nose and got a migraine, which meant she was free of demon taint.
Which means that the chip's makers were up to something dubious, since a "normal" chip couldn't tell whether Tara - who looked human - was demon, before Spike himself knew. But Buffy's a universe where magic works, and the chip's makers had already produced something which was at least part magical (Adam), so that's permitted.
It's not permitted with Gan (dragging this back on track), so for Gan, the inputs have to come entirely from within his own head.
Actually, one thing that might also survive examination - and others who know the episodes better would be able to tell me - is that Gan's chip might not be intended to operate much by itself at all. It might be designed to operate by remote control, as part of a deliberate conditioning process, and the kicks-in-at-high-levels bit is just a very basic default to back that up if the prisoner escapes, etc.
steve