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The text quoted in the question: States that in any (finite commutative) field $(A,+,\cdot)$, the distribution of the permutations $f_{(a,b)}$ defined by $f_{(a,b)}(x)=a\cdot x+b$, where $(a,b)$ is uniformly distributed on $A^*\times A$, is pair-wise independent, per the definition now given in the question. Observes that because $GF(2^n)$ is such a field, ...

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A family of functions F is a pairwise independent permutation if: Each member of the family is itself a permutation, and For any fixed $A$, $B$ (with $A \ne B$, and both from the input set of the permutation), and $f$ is a random member from the family $F$, then the pair $f(A), f(B)$ is equidistributed over all distinct pairs from the output range of the ...

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Yes. This is called format-preserving encryption. The most flexible algorithm is FFX, which uses a Feistel network with AES-based round-functions, but performs addition modulo $m$. For certain values of $m$, the range of the round function is extended in order to limit statistical biases to negligible values. When $m$ is very small, this approach isn't ...

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