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Paper · arXiv

Incentive-Aware Multi-Fidelity Optimization for Generative Advertising in Large Language Models

Generative advertising in large language model (LLM) responses requires optimizing sponsorship configurations under two strict constraints: the strategic behavior of advertisers and the high cost of stochastic generations. To address this, we propose the Incentive-Aware Multi-Fidelity Mechanism (IAMFM), a unified framework coupling Vickrey-Clarke-Groves (VCG) incentives with Multi-Fidelity Optimization to maximize expected social welfare. We compare two algorithmic instantiations (elimination-based and model-based), revealing their budget-dependent performance trade-offs. Crucially, to make VCG computationally feasible, we introduce Active Counterfactual Optimization, a "warm-start" appro...

AuthorsJiayuan Liu, Barry Wang, Jiarui Gan et al.
Primary categorycs.GT
Published7 April 2026
Last updated at source7 April 2026
cs.GTcs.AIcs.IRcs.LG
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