Grounded Iterative Language Planning: How Parameterized World Models Reduce Hallucination Propagation in LLM Agents

[Submitted on 26 Jun 2026 (v1), last revised 5 Jul 2026 (this version, v3)]

View PDF HTML (experimental)

Abstract:Language agents plan by generating not only actions but also implicit predictions of how the world will change. These imagined state updates make agents flexible, but they also create a distinct failure mode: hallucinated state claims can be written into context and propagated across subsequent decisions. In contrast, parametric world models provide measurable transition errors but are often weaker semantic planners. We study this tradeoff in graph-structured planning environments and introduce metrics for agent-world-model error, including hallucinated-state rate, propagation depth, and long-horizon error growth. We then propose Hybrid World-Model Planning (Hybrid-WM), which keeps the language model as the planner while using a small parametric transition model to predict action validity, state deltas, risk, and value. A consistency gate compares the agent’s imagined delta with the parametric prediction and triggers targeted revision only under disagreement. Across four graph-structured planning benchmarks, Hybrid-WM improves success while reducing hallucinated state propagation. In live GPT-4o-mini evaluations, it reduces hallucinated-state rate from 0.176 to 0.035; in calibrated simulator ablations, it improves success from 0.668 to 0.838 with modest additional inference. These results suggest that lightweight parametric transition models can serve as effective grounding mechanisms for language-agent planning without replacing semantic reasoning.

Submission history

From: Zekun Cai [view email]
[v1] Fri, 26 Jun 2026 07:45:15 UTC (1,414 KB)
[v2] Wed, 1 Jul 2026 18:42:32 UTC (1,414 KB)
[v3] Sun, 5 Jul 2026 07:44:24 UTC (3,768 KB)