Hallucination in machines: Why AI makes things up

We go to Artificial Intelligence (AI) chatbots for research, guidance and emotional support.

- Shweta Taneja

But how do we tackle the sweet lies they tell us, sometimes as much as 30% of the times?A recent study by Relum, an online gaming support engine, found that popular Al chatbots hallucinate upto 30% of the times that they are prompted for information. ChatGPT, the most popular product with users like us, makes up stuff around 35% of the times, while Gemini leads with hallucinations upto 38% times. Though other studies differ in the percentages (ranging from 17-35%), one thing is clear: One in five answers by Al chatbots is made up.

In October, the Australian government raised a furore when it found that a report created by Deloitte, the global consulting company, for one of its departments, cited nonexistent experts, scientific papers, even studies conducted by University of Sydney that didn’t exist. After it became an issue, Deloitte confirmed that it used Microsoft’s Azure OpenAI GPT4o system to assist in drafting parts of the report. Just as the company refunded $290,000 to the Australian government, Canada’s health department found false citations, made-up academic papers in a report that the same consultancy firm had developed for them. Again, thanks to research which used an Al chatbot.

The global market size for AI technology, infrastructure, software services and business was $371.71 billion in 2025. This is set to grow at a whopping 30.6% per year to $2.407 trillion in 2032, according to research by Markets and Markets. As AI is deployed in internal company systems, healthcare, finance, cybersecurity and defence of countries, hallucination has become a challenge for everyone from tech companies to governments. Like the Deloitte example shows, the models make up data rather than simply saying “I don't know.”