Abstract:This paper introduces MalAlgoQA, a novel dataset designed to evaluate the counterfactual reasoning capabilities of Large Language Models (LLMs) through a pedagogical approach. The dataset comprises mathematics and reading comprehension questions, each accompanied by four answer choices and their corresponding rationales. We focus on the incorrect answer rationales, termed "malgorithms", which highlights flawed reasoning steps leading to incorrect answers and offers valuable insights into erroneous thought processes. We also propose the Malgorithm Identification task, where LLMs are assessed based on their ability to identify corresponding malgorithm given an incorrect answer choice. To evaluate the model performance, we introduce two metrics: Algorithm Identification Accuracy (AIA) for correct answer rationale identification, and Malgorithm Identification Accuracy (MIA) for incorrect answer rationale identification. The task is challenging since state-of-the-art LLMs exhibit significant drops in MIA as compared to AIA. Moreover, we find that the chain-of-thought prompting technique not only fails to consistently enhance MIA, but can also lead to underperformance compared to simple prompting. These findings hold significant implications for the development of more cognitively-inspired LLMs to improve their counterfactual reasoning abilities, particularly through a pedagogical perspective where understanding and rectifying student misconceptions are crucial.