Closed-Loop Knowledge Dynamics: An Operational Framework for Saturation and Escape
Authors: Xuening Wu, Shan Yu, Shenqin Yin
Organizations: Pfizer, Shanghai, China · Independent Researcher, Hangzhou, China · Institute of Humanities and Social Science Data, Fudan University, Shanghai, China
Feedback-driven loops support iterative improvement in large language models, reinforcement learning, and autonomous discovery, yet their gains often diminish under repeated internal feedback. We study why closed-loop knowledge systems saturate and what external information can move them beyond their current attractors. We introduce a three-level operational framework in which knowledge states xt evolve through transition kernels Kθ indexed by a structural parameter θ. The governing structure is defined as the observational equivalence class of θ induced by these kernels, while attractors and basins are properties of the fixed-θ dynamics. A structural intervention changes θ and produces a detectable kernel discrepancy on pre-specified probe states, making structural change falsifiable. Using a Lyapunov drift condition, we show that stable internal dynamics approach bounded stability regions with exponentially attenuated transients and a noise-controlled residual floor. We characterize escape through a metric condition on intervention-induced attractor displacement and a baseline-relative KL lower bound for increasing escape probability. This analysis also explains why conditional mutual information alone cannot certify escape: it measures variation among intervention-conditioned updates rather than departure from the no-intervention law. Case studies in LLM code repair, sparse-reward reinforcement learning, and Bayesian optimization use matched continuation controls to illustrate how feedback strength and alignment affect quality-improving escape. Our contribution is an operational connection among stability tools, measurable intervention effects, and cross-domain diagnostics.
Iterative self-correction is increasingly deployed in agentic LLM systems, yet whether repeated refinement improves or degrades performance remains inconsistent across models. We recast self-correction as a closed-loop feedback-control problem in which the same model is both controller and plant, and analyze its error dynamics via a two-state Markov model over {Correct, Incorrect}, parameterized by the Error Introduction Rate (EIR) and Error Correction Rate (ECR). The model yields a directly measurable stability threshold -- iterate only when ECR/EIR > Acc/(1-Acc) -- in which EIR acts as a stability margin and prompting becomes lightweight controller design. Empirically, across 7 models and 3 datasets (GSM8K, MATH, StrategyQA), a sharp near-zero EIR boundary (< 0.5%) cleanly separates beneficial from harmful self-correction: only o3-mini (+3.4 pp), Claude Opus 4.6 (+0.6 pp), and o4-mini (+/-0 pp) stay non-degrading, while GPT-5 and four others lose accuracy. A verify-first prompt intervention then provides causal evidence: it drives GPT-4o-mini's EIR from 2% to 0% and converts a -6.2 pp degradation into +0.2 pp (paired McNemar, p<10^{-4}), with negligible change on already-sub-threshold models -- exactly as the diagnostic predicts. A complementary analysis of adaptive self-consistency (ASC) shows it halts harmful refinement at a 3.8 pp confidence-elicitation cost, exposing a two-tier capability structure: prompt-level EIR suppression prevents degradation, whereas ECR enhancement -- plausibly training-level -- is required for genuine gains. Self-correction should thus be treated not as a default behavior but as a control decision governed by measurable error dynamics.
Training-free verbal reinforcement learning enables LLM agents to learn from world feedback -- objective signals such as dynamic task outcomes, market returns, or demand forecasts -- by extracting verbal rules from experience and injecting them as context, updating the agent's behavior without parameter changes. However, in non-stationary environments these agents face a retention-forgetting dilemma: retaining stale insights causes negative transfer, while discarding them causes catastrophic forgetting when conditions recur. We identify four requirements for navigating this dilemma -- outcome-driven evaluation, persistent structured evidence, non-monotonic knowledge lifecycle, and compositional governance -- and show that existing methods invest heavily in experience extraction while underinvesting in insight governance. We propose a three-layer architecture -- rules, evidence, and skills -- connected by a feedback-driven curation loop that closes the governance gap. Rules capture distilled experience from world outcomes; evidence logs track each rule's reliability across episodes; skills govern which rules to apply, how to resolve conflicts, and when to abstain. On financial forecasting as a case study, where world feedback is naturally abundant, noisy, and non-stationary, we show that the same accumulated experience either degrades performance below the zero-shot baseline or dramatically improves accuracy and risk-adjusted returns, depending on whether the curation loop is present.
Large language models (LLMs) are reshaping how knowledge is produced, with increasing reliance on AI systems for generation, summarization, and reasoning. While prior work has studied cognitive offloading in humans and model collapse in recursive training, these effects are typically considered in isolation. We propose a unified perspective: humans and language models form a coupled dynamical system linked by a feedback loop of usage, generation, and retraining. We introduce a minimal model with three variables -- human cognition, data quality, and model capability -- and show that this feedback can give rise to distinct dynamical regimes. Our analysis identifies three regimes: co-evolutionary enhancement, fragile equilibrium, and degenerative convergence. Through a simple simulation, we demonstrate that increasing reliance on AI can induce a transition toward a low-diversity, suboptimal equilibrium. From an information-theoretic perspective, this transition corresponds to an emergent information bottleneck in the human-AI loop, where entropy reduction reflects loss of diversity and support under closed-loop feedback rather than beneficial compression. These results suggest that the trajectory of AI systems is shaped not only by model design, but by the dynamics of human-AI co-evolution.