{"ID":23475213,"CreatedAt":"2026-09-18T01:09:05.407443952Z","UpdatedAt":"2026-09-20T18:11:56.143995915Z","DeletedAt":null,"paper_url":"https://arxiv.org/abs/2609.20068","arxiv_id":"2609.20068","title":"Marginal utility, matrix factorization, and the Key-Value (KV) cache: a unified information-economic framework for sovereign geo-mining inference","abstract":"This paper builds a theoretical bridge between the economic notion of marginal utility and two machine-learning constructs, matrix factorization and the Key--Value cache of transformer language models. The singular value spectrum of a rating matrix is shown to be a diminishing marginal utility schedule for latent factors, the eigenvalue spectrum of the projected covariance operator to be the marginal utility schedule of a model's learned representation, and cache eviction and low-rank cache compression to be instances of constrained utility maximization under a memory budget. The three collapse into a single allocation rule: retain the top dimensions whose eigenvalue exceeds the shadow price of the binding constraint. The framework is applied to the automated extraction of structured information from geo-mining documents, where it motivates a multi-pass inference protocol, a layer-wise TIES model merging procedure, and a selection policy combining extraction quality, localization drift and energy, scalarized with a Conditional Value-at-Risk term on drift. Two empirical contributions are reported. An 11.2-million-parameter hierarchical classifier, trained in about five minutes on a single GPU, reaches 90.0 per cent level-1 accuracy on a held-out test set from a 973-document uranium-exploration corpus, against 92.0 per cent for a proprietary model on a fifty-document human audit of the same corpus, at a latency of 2.62 ms per card against approximately 2,000 ms for the API and at negligible cost. A diagnostic of uniform-density TIES merging exposes a reproducible degenerate mode in which the merged model returns token-identical outputs across five geographically distinct districts while declaring high confidence; re-executing the merge under layer-wise calibrated densities removes that signature on the diagnostic sample. The full-scale extraction benchmark, including LoRA fine-tuning, is reported as projected rather than measured and remains an empirical extension of this work.","short_abstract":"This paper builds a theoretical bridge between the economic notion of marginal utility and two machine-learning constructs, matrix factorization and the Key--Value cache of transformer language models. The singular value spectrum of a rating matrix is shown to be a diminishing marginal utility schedule for latent facto...","url_abs":"https://arxiv.org/abs/2609.20068","url_pdf":"https://arxiv.org/pdf/2609.20068v1","authors":"[\"Caroline Gans Combe\"]","published":"2026-09-17T11:19:58Z","proceeding":"cs.AI","tasks":"[\"cs.AI\",\"cs.CL\"]","methods":"[\"Transformer\",\"Language Model\",\"LoRA\"]","has_code":false}