Knowing Without Saying: How Contextual Evidence Survives but Fails to Surface in Transformers
Ruochen Jin, Tianyu Pang, Chenxi Lin, Lei Hsiung, Jun Jie Ou Yang, Tao Wen, Yujun Yan, Yaoqing Yang
Large language models frequently ignore in-context evidence that contradicts their parametric priors, producing answers that reflect default beliefs rather than the supplied passage, a phenomenon termed *knowledge conflict*. This failure is commonly attributed to insufficient encoding of the contextual signal. We challenge this explanation. Through systematic, layer-by-layer analysis in a controlled multi-hop question-answering setting, we show that models faithfully encode the context-supported answer in their intermediate representations, yet suppress it in the final layers before generation. We term this *late-layer reversal*: the representational support for the evidence answer rises through the middle layers, then collapses in the final ~40\% of the network. To explain this phenomenon, we identify a *Dual-Track* computational structure within the transformer's hidden state. A *knowledge direction*, recovered by a learned linear probe, encodes the contextually supported answer; a nearly orthogonal *output direction*, aligned with the unembedding geometry, determines the model's prediction. These two directions are causally severed: interventions along the knowledge direction produce no change in output, whereas targeted suppression of prior-restoring computation along the output direction reliably causes the model to follow the contextual evidence. Our findings hold across nine model-dataset combinations and reveal that knowledge conflict failures arise not because models fail to represent contextual knowledge, but because their generation pathway declines to consult it.