CausalVAE as a Plug-in for World Models: Towards Reliable Counterfactual Dynamics

The central challenge of world modeling is to learn representations that capture how the world evolves. However, existing world models predominantly represent future states without explicitly capturing the latent causes underlying their evolution, limiting their ability to reason about why and how the world changes. To address this limitation, we propose Abductive World Modeling (AWM), a framework that learns structured causal representations by abductively inferring latent causes from predicted futures. Specifically, we realize AWM through the Hierarchical Abductive State Pyramid (HASP), which organizes the inferred world state into three complementary components - Entity, Dynamic, and Relation - capturing what exists, how it changes, and how entities interact, respectively. By jointly reasoning over the current observation and its predicted future, HASP abductively infers these latent factors and integrates them into a structured state representation for downstream reasoning. To the best of our knowledge, AWM is the first framework to introduce abductive state inference into latent-space world modeling for learning structured representations of world dynamics. Experiments across physical prediction, causal reasoning, and action understanding demonstrate the effectiveness of our approach. Compared with V-JEPA, a state-of-the-art latent-space world model, AWM improves physical prediction AUROC by 10.7%, causal reasoning accuracy by 16.8%, and action Top-1 accuracy by 68.0%.

Latent world models are trained to predict what happens next, so nothing in their objective separates what an action caused from what merely co-occurred with it. Object-masking models such as C-JEPA intervene on what the predictor can see; we intervene on what physically happens. From one saved simulator state we run the dynamics under an action $a$ and under a reference action $a_{\varnothing}$, and train the model to predict the difference $Δz=z^{a}-z^{a_{\varnothing}}$ between the two latent futures. The resulting objective, Do-JEPA, has an effect loss, a support loss (where the action enters), a propagation loss (where its effect travels) and invariance losses (what must not change). In a synthetic system with object-aligned variables, support supervision finds the directly intervened object in 99.95% of test cases, where a sparse action mask sends the action to a nuisance slot in every case, and response-onset supervision recovers the ring-shaped propagation graph (edge AUROC 0.975 vs. 0.624). From pixels, the effect loss beats a control trained on exactly the same data: it lowers latent effect error by 28.4% on an end-to-end LeWM model and physical effect error by 13.5% when trained and tested on natural action sequences, and on three independently generated CausalWorld benchmarks it lowers responsive effect error by about 20% under physics shifts and the latent context sensitivity of predicted effects by 66%. Trained from scratch it costs factual accuracy; fine-tuning an existing model with it removes this cost. Together, these results show that intervening on the world, rather than on what the model sees, helps latent world models predict what their actions cause.

Counterfactual prediction estimates an individual's outcome under an alternative intervention given their factual observations. Such outcomes are generally not identifiable from observational data without additional assumptions. Even within the class of fully observed additive noise models (ANMs), different causal graphs can generate the same observational distribution yet imply different individual counterfactual outcomes. Predictions based on a single estimated graph ignore this structural uncertainty. We therefore target a Bayesian counterfactual posterior predictive distribution that combines predictions from plausible SCMs. We introduce CAFE (CounterfActual Prediction via Fast Posterior Estimation), an amortized inference framework that directly approximates the Bayesian counterfactual posterior predictive distribution. We pretrain a transformer-based model on synthetic counterfactual tasks generated from a diverse prior over ANMs. Given an observational dataset, an individual's factual observations, and an intervention, CAFE approximates the corresponding posterior predictive distribution in a single forward pass. Experiments show that CAFE accurately predicts individual counterfactual outcomes in identifiable settings and approximates the posterior predictive distribution when structural uncertainty induced by observationally indistinguishable causal graphs exists. Strong performance in realistic manufacturing and viticulture settings further demonstrates its empirical robustness beyond the assumptions of the training prior.