Understanding the Interplay between LLMs' Utilisation of Parametric and Contextual Knowledge: A keynote at ECIR 2025

Large Language Models (LLMs) frequently encounter conflicts between internal parametric knowledge and external contextual knowledge, yet the mechanisms governing this selection remain unclear. We show that the choice between context and parametric knowledge is linearly represented and can be controlled along a single direction in the model's residual stream. We first demonstrate that this direction generalizes across factual-conflict settings, including context formats, knowledge categories, and datasets, while consistently shifting behavior between parametric and contextual answers. We then transfer a direction learned from simple factual conflicts to three more complex task families: RAG, memory, and rule following, where models must acquire information from retrieved documents, interaction histories, or explicit rules. Across four model families and multiple transfer settings, steering consistently improves the use of prompt-provided information over the unsteered model. These results suggest that the direction captures a transferable preference for external knowledge rather than a mechanism specific to factual conflicts.

Most prior works focused on conflicts between an LLM's internal parametric knowledge and externally provided context. In contrast, we investigate how LLMs handle conflicts that arise within contextual knowledge itself. We introduce a taxonomy of six types of contextual conflicts (factual, inferential, temporal, granularity, perspective, and ambiguity) and contribute a comprehensive dataset ContextConflict for this setting. The dataset contains 5,781 samples, covers both reasoning and summarization tasks, and includes both explicit contradictions and implicit conflicts that require multi-step reasoning. Experiments on nine LLMs show that current models still fall short in resolving contextual knowledge conflicts. We further provide mechanistic interpretability insights into how LLMs process such conflicts, revealing their latent awareness of conflicts and the representational geometry underlying conflict processing. In addition, our analysis uncovers a consistent model bias towards earlier evidence, and this positional preference serves as a key obstacle to effective conflict resolution. Motivated by these findings, we further propose a simple training-free, label-free steering method that steers activations to encourage a more comprehensive incorporation of evidences for better conflict resolution. On our dataset, the method consistently improves accuracy on reasoning tasks and generates higher-quality, more balanced summaries for summarization tasks.

Large language models (LLMs) have achieved strong performance across a wide range of language-based tasks by leveraging both extensive parametric knowledge and in-context learning ability, enabling them to incorporate external information provided in the input prompt. However, the integration of external knowledge can introduce conflicts, not only between the model's internal parametric knowledge and the external information, but also among multiple pieces of external contexts. Existing approaches typically assume that either the model or the provided context is reliable, overlooking the possibility that both sources may contain errors, and avoid conflicts by privileging one source over the other, rather than actively resolving inconsistencies. To address these limitations, we propose a novel framework MACR for LLM knowledge conflict resolution that moves beyond the conventional binary choice paradigm and incorporates an explicit conflict-resolution mechanism based on a multi-agent reasoning approach. Specifically, we first propose an adaptive knowledge assessment and retrieval approach that employs a modified semantic entropy measure to quantify an LLM's confidence in its answer to a given query. Based on this confidence estimation, MACR either externalizes the model's internal knowledge as textual representations or retrieves relevant external knowledge when internal knowledge is insufficient, generating basic contexts for subsequent reasoning. Then we introduce an inductive multi-agent reasoning framework with three specialized agents that, respectively, induce explicit rules, analyze potential conflicts, and resolve inconsistencies across all available contexts. Empirical results demonstrate that MACR significantly outperforms state-of-the-art baselines across benchmarks, while also providing interpretable resolutions of explicit conflicts.