Privacy-preserved LLM Cascade via CoT-enhanced Policy Learning

Large Language Models (LLMs) have gained significant attention in on-device applications due to their remarkable performance across real-world tasks. However, on-device LLMs often suffer from suboptimal performance due to hardware limitations. A promising solution to this challenge is cascading a weaker local (on-device) LLM with a more powerful server LLM. While existing research on LLM cascade primarily optimizes the performance-cost trade-off, real-world applications impose additional requirements, such as privacy preservation, which remain largely unaddressed. In this work, we move beyond existing confidence- and logit-based LLM cascade methods and propose $\mathbf{P^{3}Defer}$, a novel Chain-of-Thought (CoT)-enhanced \textbf{p}olicy learning framework for \textbf{p}rivacy-\textbf{p}reserved \textbf{defer}ral decision-making. Our approach effectively improves cascade efficiency while mitigating privacy risks. Extensive experiments on three benchmark datasets demonstrate the effectiveness and superiority of $\mathbf{P^{3}Defer}$ over existing methods.