Understanding Why Language Models Hallucinate: Testing Reasoning Against Priors

Large language models can hallucinate even when the knowledge required for a correct answer is already available. We study this failure through a latent-key view of inference, where answer selection depends on competition among associations acquired during pretraining. We show that model predictions can be highly sensitive to individual query keywords, that these influential keywords exhibit entity-specific binding, and that their effects are systematically shaped by pretraining frequency. Multiple bindings can also compete and exhibit higher-order interactions within the same query. Based on this mechanism, we introduce a two-stage keyword-perturbation method for hallucination detection. By removing influential keywords and measuring how the model reorganizes its prediction, the method distinguishes errors caused by misleading key associations from correct decisions supported by diagnostic evidence. Across multiple models and benchmarks, perturbation provides a strong and transferable detection signal, reaching $.910$ AUROC on probe-known ScientistQA. Finally, we extend the same probabilistic framework to four hallucination regimes: knowledge deficit, wrong knowledge, context distraction, and unstable inference. Their operational distributions across benchmarks provide diagnostic context for why different detector families succeed in different settings.

Hallucination is often viewed as a direct consequence of missing knowledge: a model answers incorrectly when the correct answer is absent from its generation-time distribution, and correctly when it is present. We test this assumption by introducing a semantic notion of answer availability that aggregates token-level variants expressing the same answer concept, and asks whether the correct concept is already available at the moment the model commits to an answer. Across Qwen and Llama models from 0.8B to 72B in both Instruct and Base variants, 16-47% of Instruct hallucinations occur with substantial probability mass already on the correct concept, and the rate rises monotonically with scale. Comparing such failures against correct generations with matched semantic support, the distinguishing factor is not whether the correct concept is represented, but how its probability is distributed: correct generations concentrate mass on a single surface form, hallucinations disperse it across alternatives. The same sharpening asymmetry extends across multi-token generation and is detectable in pre-generation hidden states. Together, these results identify a single mechanism: instruction tuning sharpens answer commitment with scale, making helpfulness and confident hallucination two consequences of the same underlying disposition.

Hallucinations -- factually incorrect or unverifiable outputs -- remain one of the most challenging limitations of Large Language Models (LLMs), especially in knowledge-intensive tasks. One proposed explanation is internal knowledge conflicts arising from fixed, outdated training data. This paper investigates whether internal representations linked to knowledge conflicts correlate with hallucination behaviors in LLMs. Using probing techniques inspired by two prior works, we analyzed activations from hidden, attention, and MLP layers, as well as output logits, across predefined tasks. We probed LLaMA-3-8B on hallucination detection benchmarks and Falcon-7B on a knowledge conflict dataset. Our findings show that, although conceptually related, hallucination activation patterns cannot be fully reduced to or explained by knowledge conflict representations. Nonetheless, probing proves a robust tool across multiple languages and activation types, supporting its role in improving LLM interpretability. This work advances the broader understanding of hallucinations in LLMs and underscores the value of fine-grained analysis of their internal behavior.