When AI Overthinks: Lessons from the Illusion of Thinking Paper

2025-08-18

In this episode of Inference Time Tactics, Rob, Cooper, and CTO Byron unpack Apple’s “Illusion of Thinking” paper—why it split the AI community, what it reveals about reasoning model limits, and how hidden thinking traces shape performance. They share insights from building an open-source tool to reproduce the study, explain why models loop, overthink, or stall, and outline what it will take to build more reliable reasoning systems for real-world use. We talked about: Why Apple’s Illusion of Thinking paper sparked heated debate in the AI community.

We talked about:

Why Apple’s Illusion of Thinking paper sparked heated debate in the AI community.
How reasoning models work, including hidden “thinking” phases and token budget limits.
Key findings on when reasoning improves results, when it degrades them, and where it stalls.
Reasons models loop, overthink, or abandon tasks.
Building an open-source tool to replicate the study and test local reasoning models.
What real-time reasoning traces reveal about model behavior and limits.
Challenges in scoring reasoning quality and treating “I don’t know” as a valid output.
Why reasoning models must be matched carefully to specific tasks.
The ongoing debate over scaling vs. new architectures for advancing reasoning.
Developing a benchmarking platform to help enterprises choose models for IP-sensitive applications.