Is Your LLM Overcharging You? Tokenization, Transparency, and Incentives

State-of-the-art large language models require specialized hardware and substantial energy to operate. As a consequence, cloud-based services that provide access to large language models have become very popular. In these services, the price users pay for an output provided by a model depends on the number of tokens the model uses to generate it -- they pay a fixed price per token. In this work, we show that this pricing mechanism creates a financial incentive for providers to strategize and misreport the (number of) tokens a model used to generate an output, and users cannot prove, or even know, whether a provider is overcharging them. However, we also show that, if an unfaithful provider is obliged to be transparent about the generative process used by the model, misreporting optimally without raising suspicion is hard. Nevertheless, as a proof-of-concept, we introduce an efficient heuristic algorithm that allows providers to significantly overcharge users without raising suspicion, highlighting the vulnerability of users under the current pay-per-token pricing mechanism. Further, to completely eliminate the financial incentive to strategize, we introduce a simple incentive-compatible token pricing mechanism. Under this mechanism, the price users pay for an output provided by a model depends on the number of characters of the output -- they pay a fixed price per character. Along the way, to illustrate and complement our theoretical results, we conduct experiments with several large language models from the $\texttt{Llama}$, $\texttt{Gemma}$ and $\texttt{Ministral}$ families, and input prompts from the LMSYS Chatbot Arena platform.

Evaluation of Large Language Models via Coupled Token Generation

State of the art large language models rely on randomization to respond to a prompt. As an immediate consequence, a model may respond differently to the same prompt if asked multiple times. In this work, we argue that the evaluation and ranking of large language models should control for the randomization underpinning their functioning. Our starting point is the development of a causal model for coupled autoregressive generation, which allows different large language models to sample responses with the same source of randomness. Building upon our causal model, we first show that, on evaluations based on benchmark datasets, coupled autoregressive generation leads to the same conclusions as vanilla autoregressive generation but using provably fewer samples. However, we further show that, on evaluations based on (human) pairwise comparisons, coupled and vanilla autoregressive generation can surprisingly lead to different rankings when comparing more than two models, even with an infinite amount of samples. This suggests that the apparent advantage of a model over others in existing evaluation protocols may not be genuine but rather confounded by the randomness inherent to the generation process. To illustrate and complement our theoretical results, we conduct experiments with several large language models from the Llama family. We find that, across multiple knowledge areas from the popular MMLU benchmark dataset, coupled autoregressive generation requires up to 40% fewer samples to reach the same conclusions as vanilla autoregressive generation. Further, using data from the LMSYS Chatbot Arena platform, we find that the win-rates derived from pairwise comparisons by a strong large language model to prompts differ under coupled and vanilla autoregressive generation.