Induction Heads Interpolate N-Grams

arXiv:2607.02800v1 Announce Type: new Abstract: Induction heads are attention circuits believed to underlie in-context learning in transformers, yet a precise characterization of the estimators they implement remains elusive. We study transformers trained on order-$k$ Markov chains and identify two complementary smoothing mechanisms. First, at finite attention-weight scale, the circuit implements a soft context-matching estimator: it aggregates contributions from exact and partial context matche...