Demystifying the Privacy-Utility Trade-off in LLM Interactions

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; (...

<iframe src="https://silytics.si/embed/item/800e0abc-d7bc-4cfa-9b94-b7f8eb696096" width="420" height="190" style="border:0" loading="lazy" title="Silytics entry"></iframe>

Silytics shows public metadata from arXiv and links to the original. Information may be incomplete or out of date. Last refreshed 17 October 2026. Licenses and terms of the original apply to the work itself. Not financial, legal or professional advice.