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Sell Data to AI Algorithms Without Revealing It: Secure Data Valuation and Sharing via Homomorphic Encryption

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  • Michael Yang
  • Ruijiang Gao
  • Zhiqiang Zheng

Abstract

The rapid expansion of Artificial Intelligence is hindered by a fundamental friction in data markets: the value-privacy dilemma, where buyers cannot verify a dataset's utility without inspection, yet inspection may expose the data (Arrow's Information Paradox). We resolve this challenge by introducing the Trustworthy Influence Protocol (TIP), a privacy-preserving framework that enables prospective buyers to quantify the utility of external data without ever decrypting the raw assets. By integrating Homomorphic Encryption with gradient-based influence functions, our approach allows for the precise, blinded scoring of data points against a buyer's specific AI model. To ensure scalability for Large Language Models (LLMs), we employ low-rank gradient projections that reduce computational overhead while maintaining near-perfect fidelity to plaintext baselines, as demonstrated across BERT and GPT-2 architectures. Empirical simulations in healthcare and generative AI domains validate the framework's economic potential: we show that encrypted valuation signals achieve a high correlation with realized clinical utility and reveal a heavy-tailed distribution of data value in pre-training corpora where a minority of texts drive capability while the majority degrades it. These findings challenge prevailing flat-rate compensation models and offer a scalable technical foundation for a meritocratic, secure data economy.

Suggested Citation

  • Michael Yang & Ruijiang Gao & Zhiqiang Zheng, 2025. "Sell Data to AI Algorithms Without Revealing It: Secure Data Valuation and Sharing via Homomorphic Encryption," Papers 2512.06033, arXiv.org, revised Mar 2026.
  • Handle: RePEc:arx:papers:2512.06033
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    References listed on IDEAS

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    2. Brian Birkhead & Ashkan Eshghi & Ram D. Gopal & Hooman Hidaji & Raymond A. Patterson, 2025. "Algorithms to the Rescue: Market Mechanisms for Consensual Trading of Unbiased Individual Data," Information Systems Research, INFORMS, vol. 36(4), pages 2096-2115, December.
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