Exploring in-context learning in large language models

Zakaria Benhadi

·

Founding Engineer

at Basalt

5min

·

Nov 13, 2025

Introduction

Artificial Intelligence (AI) capabilities are increasingly embedded in various domains, ranging from healthcare to finance. However, a significant challenge in production environments is ensuring the factual accuracy of AI-generated outputs. Hallucinations, or misleading outputs that lack a factual basis, pose substantial risks. This article focuses on a crucial aspect of managing AI technologies: catching AI hallucinations before they reach users through effective production monitoring and mitigation strategies.

Understanding AI Hallucinations and Their Impact

AI hallucinations refer to incorrect, fabricated, or misleading outputs produced by AI models. These outputs often sound plausible despite lacking factual accuracy, posing operational risks particularly in sensitive sectors such as the legal, medical, pharmaceutical, and financial industries. The primary causes of these hallucinations include gaps and staleness in training data, model application in rapidly changing domains without updates, and overconfidence when generating predictions. Disconnects from real-time or authoritative external data sources can also lead to such issues. A failure to address hallucinations may result in misinformation, compliance issues, and erosion of trust.

Automated Detection Systems: Approaches and Pipelines

To tackle AI hallucinations, automated detection systems are essential. These systems typically incorporate two pipeline types: detection-only and detection-mitigation. Detection-only pipelines flag or block hallucinated content, while detection-mitigation pipelines aim to correct or rewrite outputs before they reach the user. Techniques used in these systems include leveraging model signals such as logit outputs and confidence scores, breaking down responses using knowledge triplet decomposition for factual validation, and employing entropy-based uncertainty metrics. Real-time monitoring methods such as mirrored traffic or 'flighting' systems allow different pipeline versions to be tested on live queries, ensuring the mitigation strategies are effective and adaptable over time.

Validation Pipelines and Confidence Thresholds

An effective validation pipeline is crucial for confirming the accuracy of flagged hallucinations against authoritative datasets, ensuring that the systems do not introduce new hallucinations during mitigation. Utilizing domain-specific, gold-standard datasets helps maintain high accuracy. Employing human evaluations further refines the precision and recall of detection and mitigation efforts, especially in high-stakes sectors. Establishing confidence thresholds based on model uncertainty signals is another vital step. These thresholds help decide whether outputs require blocking, validation, or mitigation, which can be tailored based on the specific use-case and domain requirements. Continuous monitoring and adapting these thresholds ensure the system remains effective despite evolving model behaviors.

Conclusion

Mitigating AI hallucinations is crucial to maintaining trust and ensuring factual accuracy in AI applications within production environments. By establishing robust detection and validation pipelines, and setting appropriate confidence thresholds, companies can minimize misinformation risks. Gradual deployment strategies, beginning with detection-only systems progressing to full mitigation, balance latency with the quality of outputs. Ultimately, ongoing human oversight remains critical for ensuring reliability, particularly in critical sectors, fortifying AI’s role as a trusted technology partner.

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