arXiv AI
Aug 26

The Shadow Price of Intelligence: Quality Degradation in LLM Inference as a Supply Chain Problem

The paper argues that large language model (LLM) providers, constrained by compute, often degrade service during congestion by routing queries to smaller models, cutting reasoning effort, or truncating context. It shows that this practice misrepresents costs because degraded answers can fail, leading to retries that inflate traffic or churn that erodes lifetime value. By modeling inference allocation with newsvendor, retry, and queueing frameworks, the authors derive a ‘shadow price of intelligence’ that quantifies the marginal value of each query, revealing that throttling under congestion acts as a demand lever rather than a cost lever.

By Elioth Sanabria
arXiv Machine Learning
Sep 21

ServeGuard: Verifiable, Bounded-Residual Confinement of Operator-Invisible Channels Without Revealing the Certified Read Factor

ServeGuard is a supply‑chain primitive that allows a publisher to ship a proof‑carrying adapter for an open‑weight language model, proving in zero‑knowledge that the adapter contains no hidden backdoor channel in the monitor’s blind subspace. The proof is inexpensive because it relies on a deterministic function of the public base model, and the served residual is the model’s own public floor. The system lets consumers or regulators verify the absence of this class of hidden channels without revealing the certified read factor or trusting the publisher.

By Dominik Dahlem, Rui Vieira