Knowledge-informed Bidding with Dual-process Control for Online Advertising

Bid optimization in online advertising relies on black-box machine-learning models that learn bidding decisions from historical data. However, these approaches fail to replicate human experts' adaptive, experience-driven, and globally coherent decisions. Specifically, they generalize poorly in data-sparse cases because of missing structured knowledge, make short-sighted sequential decisions that ignore long-term interdependencies, and struggle to adapt in out-of-distribution scenarios where human experts succeed. To address this, we propose KBD (Knowledge-informed Bidding with Dual-process control), a novel method for bid optimization. KBD embeds human expertise as inductive biases through the informed machine-learning paradigm, uses Decision Transformer (DT) to globally optimize multi-step bidding sequences, and implements dual-process control by combining a fast rule-based PID (System 1) with DT (System 2). Extensive experiments highlight KBD's advantage over existing methods and underscore the benefit of grounding bid optimization in human expertise and dual-process control.

Step 3.5 Flash: Open Frontier-Level Intelligence with 11B Active Parameters

We introduce Step 3.5 Flash, a sparse Mixture-of-Experts (MoE) model that bridges frontier-level agentic intelligence and computational efficiency. We focus on what matters most when building agents: sharp reasoning and fast, reliable execution. Step 3.5 Flash pairs a 196B-parameter foundation with 11B active parameters for efficient inference. It is optimized with interleaved 3:1 sliding-window/full attention and Multi-Token Prediction (MTP-3) to reduce the latency and cost of multi-round agentic interactions. To reach frontier-level intelligence, we design a scalable reinforcement learning framework that combines verifiable signals with preference feedback, while remaining stable under large-scale off-policy training, enabling consistent self-improvement across mathematics, code, and tool use. Step 3.5 Flash demonstrates strong performance across agent, coding, and math tasks, achieving 85.4% on IMO-AnswerBench, 86.4% on LiveCodeBench-v6 (2024.08-2025.05), 88.2% on tau2-Bench, 69.0% on BrowseComp (with context management), and 51.0% on Terminal-Bench 2.0, comparable to frontier models such as GPT-5.2 xHigh and Gemini 3.0 Pro. By redefining the efficiency frontier, Step 3.5 Flash provides a high-density foundation for deploying sophisticated agents in real-world industrial environments.