An AI assistant casually promises a refund policy that never existed, leaving a company liable for an invented commitment. This incident with Air Canada’s chatbot is a clear example of 'AI hallucination,' where AI can generate confident, yet entirely fictional, answers. These errors—ranging from factual inaccuracies and biases to reasoning failures—are collectively referred to as 'hallucinations.' In simple terms, Large Language Models (LLMs) work like advanced 'autocomplete' tools, generating c...