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Deficiency of Large Language Models in Finance: An Empirical Examination of Hallucination

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arxiv 2311.15548 v1 pith:SDGVMIGH submitted 2023-11-27 cs.CL cs.AIcs.LGq-fin.ST

classification cs.CLcs.AIcs.LGq-fin.ST
keywords hallucinationllmsempiricalfinancialmodelsbehaviorsdeficiencyexamination
verification ladder T0 review T1 audit T2 compute T3 formal
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The hallucination issue is recognized as a fundamental deficiency of large language models (LLMs), especially when applied to fields such as finance, education, and law. Despite the growing concerns, there has been a lack of empirical investigation. In this paper, we provide an empirical examination of LLMs' hallucination behaviors in financial tasks. First, we empirically investigate LLM model's ability of explaining financial concepts and terminologies. Second, we assess LLM models' capacity of querying historical stock prices. Third, to alleviate the hallucination issue, we evaluate the efficacy of four practical methods, including few-shot learning, Decoding by Contrasting Layers (DoLa), the Retrieval Augmentation Generation (RAG) method and the prompt-based tool learning method for a function to generate a query command. Finally, our major finding is that off-the-shelf LLMs experience serious hallucination behaviors in financial tasks. Therefore, there is an urgent need to call for research efforts in mitigating LLMs' hallucination.

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Cited by 4 Pith papers

Reviewed papers in the Pith corpus that reference this work. Sorted by Pith novelty score. Full citation record

  1. Hallucination Detection in Large Language Models Using Diversion Decoding

    cs.CL 2026-07 conditional novelty 6.0 of 10

    Forcing an LLM away from its greedy answer yields resistance features that train a classifier detecting hallucinations more accurately and cheaply than semantic entropy.

  2. Proof-Carrying Numbers (PCN): A Protocol for Trustworthy Numeric Answers from LLMs via Claim Verification

    cs.CL 2025-09 conditional novelty 6.0 of 10

    Proof-Carrying Numbers binds each displayed LLM number to a structured claim and only marks it verified after a policy-based mechanical check, leaving all other numbers unverified.

  3. ReasoningTrack: Chain-of-Thought Reasoning for Long-term Vision-Language Tracking

    cs.CV 2025-08 reject novelty 6.0 of 10

    FAITH masks numbers in real 10-K reports to test when financial LLMs hallucinate, and finds even top models err on 10-20% of multi-step calculations.

  4. LLM Harms: A Taxonomy and Discussion

    cs.CY 2025-12 unverdicted novelty 3.0 of 10

    This paper proposes a taxonomy of LLM harms in five categories and suggests mitigation strategies plus a dynamic auditing system for responsible development.

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