AI · Definition

What is AI hallucination?

An AI hallucination is an answer from an AI model that sounds confident but is wrong or made up. It happens because language models predict likely text, not verified facts.

Why it matters for your business

Hallucinations are the main risk in business AI. Grounding answers in your own data, showing sources and adding review steps keep them rare and easy to catch.

Example

Asked about a discount that does not exist, an ungrounded chatbot invents one; a grounded assistant replies that it found no such offer and links the pricing page.

Related terms

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