# 150M-parameter reasoning model sets new cost-accuracy frontier on ARC-AGI-1 > Source: > Published: 2026-08-12 10:21:52+00:00 Collection Papers that made me appreciate my major and my life a little more. obs=Observation, innov=Innovation. Most papers are abt improving tiny models. • 268 items • Updated • 65 ## Abstract A 150M-parameter reasoning model using recurrent latent reasoning and in-context learning achieves a new cost-accuracy frontier on ARC-AGI-1. [thinkingmachines/Inkling-Small](/thinkingmachines/Inkling-Small) We introduce BDH-CQ, a reasoning model that combines [in-context learning](/papers?q=in-context%20learning) with [recurrent latent reasoning](/papers?q=recurrent%20latent%20reasoning). Inputs presented at inference time continuously update the model's recurrent memory; the model then solves a query through iterative computation in a [high-dimensional latent space](/papers?q=high-dimensional%20latent%20space), without verbalizing its intermediate reasoning. We evaluate the model on the public [ARC-AGI-1](/papers?q=ARC-AGI-1) evaluation set and use controlled ARC-like interventions to study what it learns from demonstrations, how consistently it applies an inferred transformation, and which concepts remain difficult. A 150M-parameter configuration reaches 29.5% pass@2 at a computed inference cost of \$0.0007 per task. This operating point breaks through the previously reported [ARC-AGI-1](/papers?q=ARC-AGI-1) [cost-accuracy Pareto frontier](/papers?q=cost-accuracy%20Pareto%20frontier), establishing a new state of the art in benchmark cost efficiency. ### Community This is an automated message from the [Librarian Bot](https://huggingface.co/librarian-bots). I found the following papers similar to this paper. The following papers were recommended by the Semantic Scholar API [Penelope: Localized Latent Recurrence for Efficient Structured Reasoning](https://huggingface.co/papers/2607.25915)(2026)[Recursive Vision Language Models for General Symbolic Reasoning](https://huggingface.co/papers/2608.01534)(2026)[DiscoLoop: Looping Discrete Embeddings and Continuous Hidden States for Multi-hop Reasoning](https://huggingface.co/papers/2607.00341)(2026)[J-CoT: Chain-of-Thought in J-Space](https://huggingface.co/papers/2607.21981)(2026)[Learning to Refine Hidden States for Reliable LLM Reasoning](https://huggingface.co/papers/2606.17524)(2026)[Bridging the Gap Between Latent and Explicit Reasoning with Looped Transformers](https://huggingface.co/papers/2606.31779)(2026)[What Survives When You Compress a Recursive Reasoner for the Edge?](https://huggingface.co/papers/2606.26488)(2026) Please give a thumbs up to this comment if you found it helpful! If you want recommendations for any Paper on Hugging Face checkout [this](https://huggingface.co/spaces/librarian-bots/recommend_similar_papers) Space You can directly ask Librarian Bot for paper recommendations by tagging it in a comment: `@librarian-bot recommend` Get this paper in your agent: `hf papers read 2608.09888` ## Don't have the latest CLI? `curl -LsSf https://hf.co/cli/install.sh | bash` ## Models citing this paper 0 No model linking this paper ## Datasets citing this paper 0 No dataset linking this paper ### Spaces citing this paper 0 No Space linking this paper ## Collections including this paper 5 [Browse 5 collections that include this paper](/collections?paper=2608.09888)