Capacity, Not Format: Rethinking Structured Reasoning Failures

Deployed language models must produce outputs that are both correct and format-compliant. We study this structured-output reliability gap using two mathematical benchmarks -- GSM8K and MATH -- as a controlled testbed: ground truth is unambiguous and the output contract is strict (JSON with required fields). We evaluate three 7-9B models under five prompting strategies and report output accuracy -- the joint event of mathematical correctness and valid JSON structure -- as the primary metric. A systematic format failure emerges: NAIVE prompting (no system prompt) achieves up to 85% task accuracy on GSM8K but 0% output accuracy across all models and datasets. REFERENCE prompting (a minimal hand-written JSON format prompt) fares little better, yielding 0% output accuracy for two of four models tested. Constrained decoding enforces syntactic validity but incurs 3.6x-8.2x latency overhead and in several settings degrades task performance substantially. To overcome this limitation, we developed AloLab, an iterative system-prompt optimizer (meta-agent: Claude Sonnet 4.5) requiring only black-box API access to the target model; it reaches 84-87% output accuracy on GSM8K and 34-40% on MATH across five independent runs per model, with 29/30 paired McNemar comparisons against the best static prompt significant at p < 0.05, at near-NAIVE inference latency and without model fine-tuning. The same format failure extends to GPT-4o (OpenAI, 2024), a proprietary closed-source model: REFERENCE achieves 0% output accuracy due to systematic markdown-fence wrapping, while AloLab reaches 95.2% [94.8, 95.6]. An ablation replacing the Sonnet 4.5 meta-agent with Claude 3 Haiku reduces mean output accuracy to 61.0% and increases run-to-run standard deviation from <1 pp to 21.8 pp, confirming that meta-agent capability is a primary driver of optimization quality.

When a language model must choose one answer from a large space of equally valid options, a format clause -- "Reply with JSON only" -- changes which answer it chooses. We re-run the One-Word Census (arXiv:2607.12796): 31 wide-answer-space category prompts asked of 44 models, now with the reply requested in JSON -- no schema enforcement, no constrained decoding, only the request. Convergence deepens sharply: on the unconstrained "Pick a word" prompt the modal answer rises from 41% to 64% of the pool and distinct answers fall from 52 to 36; mean answer-choice surprisal drops from 1.80 to 1.58 bits. The tax is progressive: six of 44 models move individually (BH-FDR q=.10), all toward the mode, led by the most distinctive models, while the conformist floor is immobile. It is a sharpener, not a re-indexer -- the plain-chat modal answer survives in 28 of 31 categories. Defaults are register-indexed: a within-run re-sample (n=20) finds JSON shifts 53% of a model's stable chat defaults, mostly back to the crowd, and installs defaults absent from chat (Claude Fable 5 answers "cerulean" for colour 0% of the time in chat, 100% in JSON). Full-battery controls reveal a register gradient: compression is significant and specific to the answer-delivery formats models are trained to speak (JSON -0.22 bits, p=.0002; XML -0.19, p=.002), absent for YAML and CSV, and reversed for an arbitrary bracket wrapper (+0.13, p=.009) -- weighing the mechanism toward tool-use post-training. Enforcing the schema at the decoder (response_format) compresses no further than the request (-0.03 bits): the collapse lives in the model's response to the register, not the decoder. Structured output is how software consumes language models, and that surface is served by a measurably more homogeneous model than the chat surface on which models are evaluated, compared, and chosen.

Practitioners make three prompt-design decisions with almost no controlled evidence behind them: how to format instructions and context (markdown, plain text, prose, or tabular), how many simultaneous instructions a system prompt can carry before compliance degrades, and how much context a model can hold before recall and honesty degrade. We report two controlled experiments crossing all three factors on one held, contamination-free synthetic corpus (the "Book of Veyra," 8,780 uniquely-named entities, deterministically regenerable from a fixed seed), evaluated across five models. Experiment 1 (960 calls/model) measures instruction-following decay as rule count N grows from 10 to 160, crossed with four formats and system-prompt vs. user-turn placement. Perfect-response rate collapses to zero by N=80 for every model, format, and placement. Placement produces effects at least as large as format at N=160 in most models, but the direction is model-specific. No model shows a reliable markdown advantage; one 35B model favors plain text instead. Experiment 2 (5,520 calls/model) measures recall accuracy, false-premise sycophancy, and absent-fact fabrication across a 2k-to-512k-token context ladder in the same four formats. Recall stays near ceiling through 64-128k tokens, then degrades sharply and format-dependently: one model's accuracy spread reaches 48 points at 128k tokens. Fabrication never occurs (0/5,760 probes), and sycophancy stays negligible (<=8.3%). What rises sharply near each model's context ceiling is outright refusal to answer (0% to 79-90%), distinct from sycophancy or fabrication. Neither pre-registered format ordering holds, and token overhead (+22% to +37% over plain text) further changes which format is preferable where accuracy spread is genuine. We release the full harness, corpus generator, and raw results (VeyraBench): https://github.com/iNetanel/veyrabench