Internal vs. Grounded Reasoning
Internal Reasoning (Chain-of-Thought)
The model generates reasoning traces using only its internal representations, no external lookups or environment interaction.
Strengths:
- Flexible reasoning structure
- Can synthesize across domains
- No latency from external calls
- Works when external APIs unavailable
Weaknesses:
- Hallucination (56% of failures are fabricated facts)
- Error propagation through reasoning chain
- No mechanism to verify claims
- Higher false positive rate (14%)
Best for:
- Tasks requiring creative synthesis
- Domains where model has strong coverage
- When speed matters more than verification
- Arithmetic, symbolic, and commonsense reasoning with high internal confidence
Grounded Reasoning (ReAct Pattern)
The model interleaves reasoning traces with external actions (search, lookup) and incorporates observations into subsequent reasoning.
Strengths:
- Factual grounding (0% hallucination in failures)
- Traceable claims, users can verify sources
- Updates from real-world information
- Lower false positive rate (6%)
Weaknesses:
- Reasoning rigidity (47% of failures are reasoning errors)
- Dependent on action space design
- Can fail when search returns unhelpful results (23% of failures)
- Slower due to external calls
Best for:
- Knowledge-intensive tasks requiring verification
- Domains where model knowledge may be incomplete or outdated
- High-stakes decisions requiring audit trails
- Multi-hop reasoning requiring external fact-gathering
Key Differences
| Dimension | Internal | Grounded |
|---|---|---|
| Hallucination rate | High (56%) | Near-zero (0%) |
| Flexibility | High | Constrained |
| Verifiability | None | Full provenance |
| Speed | Fast | Slower |
| Failure mode | Fabrication | Rigidity/search failure |
When Each Applies
The best systems combine both. When internal confidence is high, reason freely. When uncertain or when factual accuracy is critical, ground in external retrieval. Hybrid approaches (switching between modes based on confidence) outperform either alone.
Related: 05-molecule—thought-action-observation-pattern, 07-molecule—ui-as-ultimate-guardrail