RPSD: Retrieval-Privileged On-Policy Self-Distillation with Optimal Transport

Sequential recommendation predicts a user's next interaction from historical behavior. Recent LLM-based methods recast this task as generative recommendation and increasingly adopt reinforcement learning such as GRPO for post-training. However, these methods suffer from two limitations, namely credit-blind optimization, where a sequence-level reward is shared across all generated tokens, and collaborative-blind supervision, where each training signal is derived from a single user and ignores behavioral patterns shared across similar users. To address both issues, we propose Retrieval-Privileged on-policy Self-Distillation (RPSD). For credit-blind optimization, we introduce on-policy self-distillation (OPSD), in which a teacher with privileged knowledge re-evaluates the student's on-policy response, and the token-level confidence difference between the student and teacher reshapes the shared sequence-level advantage into token-specific credit. However, the privileged knowledge in vanilla OPSD is still derived from a single user, leaving collaborative-blind supervision unresolved. We therefore ground the teacher in collaborative behavioral evidence from similar users. Specifically, we use temporally aware optimal transport (OT) to compare interaction trajectories across users by jointly considering item similarity and temporal structure, and further apply diversity-aware selection to retain complementary trajectories as privileged evidence. In this way, on-policy self-distillation provides fine-grained token-level credit, while OT enriches the teacher with structured cross-user evidence. To the best of our knowledge, this is the first work to bring on-policy self-distillation to sequential recommendation and to use cross-user behavior as its privileged signal. Extensive experiments across multiple real-world datasets demonstrate that RPSD achieves state-of-the-art performance.