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BDH-CQ: In-Context Learning with Recurrent Latent Reasoning

arXiv:2608.09888NEAILG10 aug 20261 min readHN ×8PDF

A 150M-parameter model learns visual puzzles from examples and reasons silently, for a fraction of a cent.

57x

cheaper

Cost per ARC task

Reaches 29.5% pass@2 for $0.00070 per task

How it works

  1. Reasoning costs tokens

    Chain-of-thought models narrate every step as text. Long traces drive up tokens, latency and inference compute.

  2. Memory plus latent loops

    Demonstrations update a recurrent memory. The query is then solved by repeated hidden-state updates, decoding only the answer.

  3. Cheap ARC solving

    Scores 29.5% pass@2 on ARC-AGI-1 at $0.00070 per task. That beats the prior cost–accuracy frontier.

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From the paper