Stemming Hallucination in Language Models Using a Licensing Oracle
Authors: name: Simeon Emanuilov, name: Richard Ackermann

Language models exhibit remarkable natural language generation capabilities
but remain prone to hallucinations, generating factually incorrect information
despite producing syntactically coherent responses. This study introduces the
Licensing Oracle, an architectural solution designed to stem hallucinations in
LMs by enforcing truth constraints through formal validation against structured
knowledge graphs. Unlike statistical approaches that rely on data scaling or
fine-tuning, the Licensing Oracle embeds a deterministic validation step into
the model's generative process, ensuring that only factually accurate claims
are made. We evaluated the effectiveness of the Licensing Oracle through
experiments comparing it with several state-of-the-art methods, including
baseline language model generation, fine-tuning for factual recall, fine-tuning
for abstention behavior, and retrieval-augmented generation (RAG). Our results
demonstrate that although RAG and fine-tuning improve performance, they fail to
eliminate hallucinations. In contrast, the Licensing Oracle achieved perfect
abstention precision (AP = 1.0) and zero false answers (FAR-NE = 0.0), ensuring
that only valid claims were generated with 89.1% accuracy in factual responses.
This work shows that architectural innovations, such as the Licensing Oracle,
offer a necessary and sufficient solution for hallucinations in domains with
structured knowledge representations, offering guarantees that statistical
methods cannot match. Although the Licensing Oracle is specifically designed to
address hallucinations in fact-based domains, its framework lays the groundwork
for truth-constrained generation in future AI systems, providing a new path
toward reliable, epistemically grounded models.