Understanding Why Language Models Hallucinate: Testing Reasoning Against Priors

Yangfan Hu, Xuhan Tong, Haoyue Bai, Xi Ding, Shashank Muralidhar Bharadwaj, Siyang Cao, Robert D Nowak, Jiawei Zhang


Abstract
Large language models often produce hallucinated answers that violate prompt-level constraints. A key diagnostic question is whether these failures reflect missing knowledge, or whether the model has the relevant information but follows the wrong inference path. We study this phenomenon as *inference misalignment*: a mismatch between the answer supported by the prompt and the answer favored by statistically salient latent associations. We formalize this view with a latent key–task model, in which pretraining-frequency imbalance can cause a shortcut path to dominate the constraint-sensitive path and induce positive inference loss. The framework predicts two failure modes: task-retrieval bias in entity disambiguation and key-selection bias in action choice. We introduce *TrapQA*, a controlled diagnostic testbed with two components. *ScientistQA* tests disambiguation among similar scientists with supplementary factual probes, while *Real-Life Constrained QA* tests everyday constraint following under salient shortcuts. Our results show that hallucination can arise from biased latent inference rather than absent knowledge alone.
Anthology ID:
2026.findings-emnlp.2092
Volume:
Findings of the Association for Computational Linguistics: EMNLP 2026
Month:
October
Year:
2026
Address:
Budapest, Hungary
Editors:
Hung-Yi Lee, Sunipa Dev, Jessy Li, Desmond Elliott
Venue:
Findings
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SIGDAT
Publisher:
Association for Computational Linguistics
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Pages:
44555–44581
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URL:
https://aclanthology.org/2026.findings-emnlp.2092/
DOI:
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Cite (ACL):
Yangfan Hu, Xuhan Tong, Haoyue Bai, Xi Ding, Shashank Muralidhar Bharadwaj, Siyang Cao, Robert D Nowak, and Jiawei Zhang. 2026. Understanding Why Language Models Hallucinate: Testing Reasoning Against Priors. In Findings of the Association for Computational Linguistics: EMNLP 2026, pages 44555–44581, Budapest, Hungary. Association for Computational Linguistics.
Cite (Informal):
Understanding Why Language Models Hallucinate: Testing Reasoning Against Priors (Hu et al., Findings 2026)
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https://aclanthology.org/2026.findings-emnlp.2092.pdf