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AI & Machine Learning Term 26 of 59

Hallucination

Definition

The generation of plausible-sounding but false or fabricated information by an AI system. In legal contexts, this includes invented case citations or nonexistent statutes; in finance, fabricated data or regulations. Hallucination risk requires verification controls and human oversight.

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This definition is from Agentic AI in Law and Finance, which provides comprehensive treatment with examples and governance guidance.