Neither Stochastic Parroting nor AGI: LLMs Solve Tasks through Context-Directed Extrapolation from Training Data Priors

Recent benchmarks reveal that despite strong reasoning capabilities, large language models (LLMs) still struggle to faithfully apply complex contextual knowledge. These failures are often not wholesale reasoning collapses: in context-rich tasks, models may follow the central reasoning path while missing peripheral, persistent, or format-sensitive requirements.

Large Language Models (LLMs) perform well on reasoning benchmarks, but it remains unclear whether this reflects genuine contextual reasoning or reliance on facts memorized in their parameters. We investigate this by distinguishing two possibilities: a broad memorization bias, where familiar content improves reasoning performance, and the Strong Parametric Shortcut Hypothesis, where models skip reasoning entirely and recall stored answers. To test these effects, we introduce MemoReason, a human-curated benchmark that pairs factual reasoning tasks with structurally identical \fictitiousterm{} versions where real entities like people, companies, or dates are systematically replaced by \fictitiousterm{} ones of the same type. This \scorerevision{preserves task structure and specified reasoning operations} while varying the familiarity of the context, allowing controlled measurement of how the parametric memory affects reasoning. \revision{Our evaluation of recent LLMs reveals consistent and statistically significant performance drops of up to 15.7% in the fictitious setting, demonstrating a clear memorization bias.} However, a targeted analysis of \revision{questions failed in the fictitious setting} shows that models rarely respond with the corresponding factual answer, indicating that direct parametric shortcuts are not the dominant failure mode. These findings suggest that parametric memory influences reasoning through mechanisms more complex than simple factual recall. MemoReason provides a controlled framework for studying these mechanisms and for extending paired factual-fictitious{} evaluation to broader reasoning settings.

Are large language models (LLMs) bad at capturing human judgment? Two commonly stated limitations are that LLMs fail to capture full distributions of responses, and that their judgments are unstable across wording variations. We demonstrate simple prompting strategies that mitigate these limitations. Across two datasets--a U.S.-representative set of 144 moral scenarios and 38 moral beliefs from the International Social Survey Programme's Family and Changing Gender Roles module covering 32 countries--we show how simple elicitation techniques help improve AI-human alignment. First, prompting models to report standard deviations and response proportions recovers the full range of human responses better than common strategies. Second, ensuring scenarios are clear to human participants--as reflected in human confusion ratings--boosts model alignment, and LLMs can track human confusion ratings. At the same time, we find that LLMs' estimates of their own error are poorly calibrated, though they can predict human variability relatively well. These results suggest that asking better questions to LLMs can yield better answers.