Learning Implicit Causal World Models from Multi-Agent Demonstrations

World Models (WM) are increasingly seen as a foundation for intelligent agents that can predict, plan, and act beyond their training distribution. In this paper, we study WMs from a causal perspective across multiple levels of abstraction, ranging from perceptual observations to building a conceptual representation of the structure governing the environment dynamics. We argue that useful WMs must go beyond generative capabilities alone: they should also capture entity properties, entity-to-entity interactions, and entity-to-environment interactions that determine and explain the dynamics of a system. We provide a formal definition of Causal WMs (CWMs) grounded in the tasks they are intended to support, connecting world modelling with existing work in causal representation learning, object-centric learning, causal discovery, structural causal models, and model-based decision-making. Finally, we relate CWMs to the literature on identifiability, clarifying when the components of a WM can be recovered from data and up to which equivalence. With this, we ground WMs in representations and structures that support causal reasoning and informed decision-making.

Embodied world models learn to predict future physical dynamics from visual observations and control signals, where physical knowledge is implicitly entangled within latent representations. We introduce CausalWM, a 16B embodied world model that performs explicit causal chain-of-thought reasoning before future video prediction. CausalWM organizes useful variables into a reasoning trajectory, allowing the model to progressively capture causal dependencies underlying physical evolution. To train CausalWM, we collect 31K hours embodied data and develop a three-stage paradigm consisting of large-scale video pre-training, causal CoT mid-training, and multi-objective RL post-training. Despite using only a limited set of supervised CoT variables, CausalWM exhibits emergent in-context learning capabilities, enabling contextual visual feature guidance and efficient few-step generation. CausalWM achieves state-of-the-art performance across language-conditioned, action-conditioned, single-view and multi-view benchmarks, including Top-1 performance on TriWorldBench leaderboard.

How do LLM agents come to both understand environments they act in and master tasks set within them? Through controlled experiments combining world-model training (next-state prediction) and policy training (reward maximization), we investigate this question. We dissect the resulting models through their additive parameter updates. Geometrically, we find effective world-model updates are low-rank and share an input-feature subspace with policy updates while writing to nearly orthogonal output directions, whether trained separately or sequentially. However, we find that, in projection interventions, the sequential update induces more robustness than separate policy RL when removing the world model's leading input directions, suggesting that it has learned alternative input pathways. Behaviorally, we find the sequentially trained agent explores a wider range of states and actions. Based on this, we ask: does policy training preserve world knowledge as well as it could? We probe this with training-free merging built on the geometrically motivated input basis plus an online world-model loss during policy RL, and show both improve over the untreated baseline. Our findings suggest world knowledge and task-directed ability can be learned in geometrically complementary forms, and that future post-training pipelines should consider how best to engineer the interface between them.