When does Chain-of-Thought Help: A Markovian Perspective

We develop a learning-theoretic framework for understanding Chain of Thought (CoT). We model CoT as the interaction between an answer map and a chain rule that generates intermediate questions autoregressively, and define the reasoning risk of a hypothesis under this interaction. Our first result is a tight canonical decomposition of this risk into two terms with opposing roles: an oracle-trajectory risk (OTR), which captures the benefit of CoT and reduces to a target-domain risk in a domain adaptation problem, and a trajectory-mismatch risk (TMR), which captures the cost of CoT through error accumulation along mismatched reasoning trajectories. We then show that this cost is unavoidable without structure: if any one of the loss, the hypothesis answer map, or the chain rule lacks stability, the TMR can be arbitrarily large even when the OTR is zero and the hypothesis is uniformly close to the ground truth. Conversely, under stability, we prove a tight upper bound on the TMR governed by an exact amplification factor that identifies bounded, linear, and exponential error-growth regimes. Together, these results give a precise theory of when CoT helps, when it hurts, and what controls the transition between the two.

Chain-of-thought (CoT) reasoning allows humans to inspect how large language models reach their answers, and oversee model behaviour. This reasoning comes at an increased inference cost, motivating efficient methods that train models to solve tasks using fewer tokens. However, a common concern is that such training may cause models to skip important reasoning steps, so the CoT no longer faithfully reflects the model's decision. It is unclear whether or when this occurs in practice, since different efficiency methods apply length pressure to models' CoT in distinct ways, and faithfully explaining a model's decision takes more tokens on some tasks than others. To understand these dynamics, we fine-tune a variety of models with three methods that apply length pressure differently, namely a fixed generation budget, a per-example length target, and a group-relative length reward. We evaluate how efficient reasoning affects CoT faithfulness (i.e., how well the CoT reflects model decisions on related inputs) and monitorability (i.e., whether the CoT reveals when input interventions alter the output). We find that it affects faithfulness and monitorability differently. Faithfulness falls in most settings, primarily because the trained models are less consistent. Monitorability is more robust, as models keep acknowledging the influence on their answer even when the CoT is much shorter.

Whether intermediate reasoning is computationally useful or merely explanatory depends on whether chain-of-thought (CoT) tokens contain task-relevant information. We present a mechanistic causal analysis of CoT on GSM8K using activation patching: transferring token-level hidden states from a CoT generation to a direct-answer run for the same question, then measuring the effect on final-answer accuracy. Across models, generating after patching yields substantially higher accuracy than both direct-answer prompting and the original CoT trace, revealing that individual CoT tokens can encode sufficient information to recover the correct answer, even when the original trace is incorrect. This task-relevant information is more prevalent in correct than incorrect CoT runs and is unevenly distributed across tokens, concentrating in mid-to-late layers and appearing earlier in the reasoning trace. Moreover, patching language tokens such as verbs and entities carry task-solving information that steers generation toward correct reasoning, whereas mathematical tokens encode answer-proximal content that rarely succeeds. Patched outputs are often shorter and yet exceed the accuracy of a full CoT trace, suggesting complete reasoning chains are not always necessary. Together, these findings demonstrate that CoT encodes recoverable, token-level problem-solving information, offering new insight into how reasoning is represented and where it breaks down.