Gen AI Hallucinations: The Good, the Bad, and the Costlyby@manasvi
315 reads
315 reads

Gen AI Hallucinations: The Good, the Bad, and the Costly

by Manasvi AryaMarch 14th, 2024
Read on Terminal Reader
Read this story w/o Javascript
tldt arrow

Too Long; Didn't Read

Dive into the complexities of Gen AI hallucinations, examining their implications and costs. Explore its effects and potential mitigations.
featured image - Gen AI Hallucinations: The Good, the Bad, and the Costly
Manasvi Arya HackerNoon profile picture

As companies welcome the exciting benefits of Generative AI for getting more work done, they also face a tricky problem: Gen AI Hallucinations. Ideally, AI-generated results should be reliable without human assistance. But sometimes, AI can hallucinate or generate fictitious content that poses a great risk.

When wrong information gets out, it doesn't just cause embarrassment—it can hurt a company's reputation and erode people’s trust. So, while everyone wants to use Gen AI to be more efficient, they must also be careful to avoid these mistakes that could damage their image.

What is a Gen AI Hallucination?

Gen AI hallucination, seen in Large-Language Models (LLMs) like ChatGPT, often leads to inaccurate information and responses, ranging from slight deviations from facts to entirely fabricated content.

LLMs operate by predicting the next word in a response based on the user's input, lacking independent reasoning abilities, which can result in errors. Given the natural fluency and coherence of the generated text, fact-checking is essential to prevent the dissemination of false information.

How AI hallucinations work


An infamous incident of AI hallucination occurred with Bard when asked about discoveries from the James Webb Space Telescope. Bard claimed the telescope was the first to capture images of an exoplanet outside our solar system. But this information was false and was quickly debunked through fact-checking.

Why Do Gen AI Hallucinations Happen?

Hallucinations in generative AI models often stem from the following:

Inaccurate context retrieval: Irrelevant or subpar information fetched by the retrieval system can degrade output quality, causing errors or misinformed responses.

Ineffective prompts: Poor user prompts can mislead the LLM, resulting in responses based on wrong or unsuitable context. Additionally, if the underlying app prompt is ineffective this could also hurt the GenAI app’s information retrieval process.

Complex language challenges: Difficulty with idioms, slang, or non-English languages may result in incorrect or illogical responses, especially if the retrieval system fails to obtain or decipher relevant context in these languages.

Why Are Gen AI Hallucinations a Problem?

AI hallucinations pose serious risks beyond technical errors, impacting your brand's reputation and consumer trust. Let’s briefly examine all the problems caused by Generative AI hallucinations.

  1. Reputational Damage

    The reputation and status of the impacted party may be seriously damaged when AI-generated content is deliberately used to propagate false information or defamatory statements.

    This involves a bad reputation, a decline in trust, and financial consequences. It can be difficult to reverse or undo the harm caused once false information has been disseminated, which can have a long-lasting impact on relationships with partners, consumers, and the general public.

  2. Legal Consequences

    If we look at the legal aspects of AI hallucinations, we’ll find tons of them. These legal consequences range from defamation, invasion of privacy, or copyright infringement. This could also happen unintentionally. Imagine you’re just exploring AI but end up creating something that someone doesn’t. In that case, you’ll have to face legal charges if it becomes viral.

    A few years back in 2019, one such event happened when a deepfake video claiming to be Mark Zuckerberg went viral. He was caught on camera making offensive and untrue remarks. The company's stock price dropped significantly, but it was a joke. After that, the business took the makers of the deepfake video to court.

  3. Medical Mistakes

    Hallucinations caused by generative AI can potentially cause medical errors by presenting false or misleading information. For example, errors in the data produced by the AI model may lead to a misdiagnosis or an ineffective course of therapy if medical personnel rely on AI-generated content for diagnostic or therapeutic suggestions.

    A study published in JAMA Network Open in 2020 raised issues with commercial AI algorithms used to diagnose dermatology. The study discovered that these algorithms, intended to evaluate pictures of skin lesions, showed notable errors, especially when differentiating between benign and malignant lesions. This demonstrates how crucial it is to thoroughly validate and continuously assess AI algorithms in the healthcare industry.

  4. Compliance Challenges

    Compliance issues can occur when AI hallucinations result in the creation of content that does not adhere to industry norms or legal constraints. For instance, businesses may face legal and financial repercussions if AI-generated material violates data privacy laws by unintentionally revealing private information.

    Creating biased or discriminating information against equality and fairness could be one way to do this. Organizations must implement robust governance frameworks and quality assurance processes to address compliance challenges associated with AI hallucinations.

  5. Financial Loss

    Hallucination in Artificial Intelligence can also result in financial loss. That occurs if inaccurate content creation causes expensive mistakes or interferes with corporate processes. For instance, if financial reports produced by AI are erroneous or contain misleading information. It forces the investors or companies to make poor investment decisions that result in losses.

    Similarly, inaccurate or misinterpreted customer preferences might cause AI-generated marketing initiatives to fall flat with target demographics. Thus wasting money and missing out on sales possibilities.

  6. Disruption of User Trust

    AI hallucinations can create fake information that closely mimics reality, which can seriously undermine consumer trust. This may result in disseminating false information, swaying public opinion, and growing fake news.

    Users will find it easier to trust sources and separate fact from fiction when AI-generated material is identical to real information. This erodes public confidence in disseminating information and may significantly affect public trust.

Are Artificial Intelligence Hallucinations Always Bad?

Hallucinations, despite their potential risks, can hold value. LLMs exhibit a unique set of strengths and weaknesses. While they may struggle with tasks traditionally associated with computer proficiency, such as search capabilities, they excel in storytelling, creativity, and aesthetics.

Hallucinations in AI should be reframed as a feature rather than a flaw within AI systems. Marketers can leverage this by prompting AI to hallucinate its interface, enabling it to perform tasks that are otherwise challenging or costly to measure.

For instance, marketers could assign scores to various objects based on their alignment with the brand and then task AI with identifying potential lifelong consumers based on those scores. Ultimately, manipulating these hallucinations could lead to innovative solutions and enhanced outcomes in the advertising and marketing space.