I always struggle a bit with I’m asked about the “hallucination problem” in LLMs. Because, in some sense, hallucination is all LLMs do. They are dream machines.
We direct their dreams with prompts. The prompts start the dream, and based on the LLM’s hazy recollection of its training documents, most of the time the result goes someplace useful.
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It’s only when the dreams go into deemed factually incorrect territory that we label it a “hallucination”. It looks like a bug, but it’s just the LLM doing what it always does.