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AII-1001-92739
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AI Reasoning Systems Show Rising Hallucination Rates Despite Improved Performance

Advanced AI reasoning systems from major companies are producing false information at increasing rates despite improved mathematical capabilities, with hallucination rates reaching as high as 79 percent on some tests. The phenomenon was demonstrated when a Cursor support bot falsely informed customers of a non-existent policy, causing customer complaints and account cancellations, highlighting reliability concerns as AI is deployed for customer-facing tasks.

5 May 2025 Β· OpenAI Β· Reliability and hallucination
5 May 2025
AII-1001-927393 sources ↓
Quick facts
Category
Reliability and hallucination
Country
United States
Source
The New York Times
Date
5 May 2025
Drafted by
Raidu Incident Detection

What happened

New reasoning AI systems from OpenAI, Google and DeepSeek are generating higher hallucination rates than earlier systems. OpenAI's o3 system hallucinated 33 percent of the time on the PersonQA benchmark test, more than twice the rate of the previous o1 system. The o4-mini model hallucinated at 48 percent.

An AI support bot for Cursor, a programming tool, informed customers that they could no longer use the product on multiple computers. The policy did not exist. Customers posted angry complaints online and some cancelled their accounts after learning the announcement was false.

Reported impact

Cursor customers lost trust in the company's AI support after receiving false policy information and had to be corrected by company leadership. Some customers cancelled their accounts in response to the misinformation.

Index analysis

Hallucination rates on newer AI systems have reached as high as 79 percent on some tests, despite these systems having improved mathematical capabilities. OpenAI's own tests show its newest reasoning models hallucinate more frequently than previous versions.

Governance controls

According to Vectara's CEO, despite best efforts by companies building AI systems, hallucinations are an inherent feature that cannot be eliminated. The phenomenon raises broader concerns about the reliability of AI systems used for an increasing array of tasks across businesses and consumers.

Classification

Category
Reliability and hallucination
Industry
Consumer services
Country
United States
Harm status
Actual harm
Intent
Unintentional
Timing
Post-deployment
Harm types
Reputational, Economic or property
Harmed
Consumers, Business
Failure modes
Hallucination
AI systems
o3, o1, o4-mini

Sources and evidence

This record was researched and written by the Index, based on the following original reporting.

The New York Times
A.I. Hallucinations Are Getting Worse, Even as New Systems Become More Powerful
5 May 2025
Paperblog
Hallucinations on the Rise Among More Powerful AIs - Paperblog
5 May 2025
The Star
AI is getting more powerful, but its hallucinations are getting worse
6 May 2025