Why LLMs Remember but Fail to Apply After Fine-Tuning

HKUST · hf · 2026-07-13

This paper investigates a common issue in LLM fine-tuning: models rapidly memorize new knowledge but fail to apply it during downstream reasoning tasks.

The authors formalize this phenomenon as the Knowing–Using Gap, characterized by two aspects:

To explain the underlying mechanics, the paper introduces a self-patching intervention method. This tracks the spatial diffusion dynamics of knowledge within the model and identifies locations where migrating representations to the correct layers significantly resolves failed cases. The findings support a "knowledge circuit mismatch" hypothesis: although the knowledge exists internally, it is not routed to the layers engaged in computation. Finally, the authors propose a simple heuristic strategy that recovers about 58%–75% of the oracle margin in generalization failures.

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