I think the better word is confabulation; fabricating plausible but false narratives based on wrong memory. Fundamentally, these models try to produce plausible text. With language models getting large, they start creating internal world models, and some research shows they actually have truth dimensions. [0]
I'm not an expert on the topic, but to me it sounds plausible that a good part of the problem of confabulation comes down to misaligned incentives. These models are trained hard to be a 'helpful assistant', and this might conflict with telling the truth.
Being free of hallucinations is a bit too high a bar to set anyway. Humans are extremely prone to confabulations as well, as can be seen by how unreliable eye witness reports tend to be. We usually get by through efficient tool calling (looking shit up), and some of us through expressing doubt about our own capabilities (critical thinking).
I'm not an expert on the topic, but to me it sounds plausible that a good part of the problem of confabulation comes down to misaligned incentives. These models are trained hard to be a 'helpful assistant', and this might conflict with telling the truth.
Being free of hallucinations is a bit too high a bar to set anyway. Humans are extremely prone to confabulations as well, as can be seen by how unreliable eye witness reports tend to be. We usually get by through efficient tool calling (looking shit up), and some of us through expressing doubt about our own capabilities (critical thinking).
[0] https://arxiv.org/abs/2407.12831