AI Glossary
What it means, why it matters to your business, and where it shows up in a real build decision.
In plain terms
A hallucination is when an AI model states something false with full confidence, inventing a fact, source, or number that looks completely plausible. Hallucination is the central trust problem with AI. Grounding answers in your own data and citing sources is how serious systems keep it rare and catchable.
Hallucination is an AI confidently stating the wrong flight time. The tone, format, and surrounding context look completely reliable. The specific fact is invented.
A legal tech tool, without grounding, cites a case that does not exist. The lawyer who submits the brief faces a professional conduct review. One hallucination with no guardrail became a serious liability.
Hallucination is not a feature. It is a known failure mode to design against. Build grounding, source citations, and human review checkpoints into any high-stakes AI output.
Do not accept hallucination as an inherent property of AI you cannot address. Grounding, RAG, and evals reduce it dramatically. The question is whether you have invested in those safeguards.
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