Demystifying the Privacy-Utility Trade-off in LLM Interactions

• URL: http://arxiv.org/abs/2609.10992v2
• Date: Fri, 11 Sep 2026 09:30:30 GMT
• Title: Demystifying the Privacy-Utility Trade-off in LLM Interactions
• Abstract summary: We present a lightweight model Veilmind-4B to drive a dynamic extraction-sanitization-restoration pipeline.<n>Our approach reaches a low-leakage privacy point while preserving substantially higher response utility than existing privacy-oriented baselines.
• Score: 17.156111398729863
• License: http://creativecommons.org/licenses/by/4.0/
• Abstract: The integration of Large Language Models into daily tasks relies on context-rich instructions, inevitably exposing sensitive user information. Current privacy-preserving methods typically employ context-agnostic static rules, causing severe utility degradation. However, the specific mechanisms governing how sanitization impacts downstream performance remain largely underexplored. To address this, we conduct a systematic analysis to deconstruct the privacy-utility trade-off, uncovering three underlying mechanisms: (1) Context-Dependent Utility, which first establishes when to sanitize by revealing that data value shifts from critical constraints to dispensable noise based on user intent; (2) Strategic Adaptation, which subsequently determines how to sanitize by dictating that the choice between removal and replacement depends on the task's reliance on factual integrity versus structural coherence; and (3) Combinatorial Interplay, which finally extends the protection scope by demonstrating that attributes form a semantic web of synergistic dependencies or antagonistic redundancies. Guided by these insights, we introduce an intent-driven local protection framework. By distilling a lightweight model Veilmind-4B to drive a dynamic extraction-sanitization-restoration pipeline, our approach reaches a low-leakage privacy point while preserving substantially higher response utility than existing privacy-oriented baselines, advancing the privacy-utility trade-off toward the Pareto frontier.

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