Definition
Hallucination is the generation of plausible-sounding but factually incorrect statements by an AI engine. Common causes: retrieval failed to surface authoritative source; the model interpolated between conflicting sources; the query is outside any cited source's coverage. For AEO purposes: hallucinations about YOUR brand are a serious risk that can be mitigated by being the cited authoritative source.
User asks 'what does Halden & Ruiz do?'. If Halden & Ruiz has no Wikidata entry and sparse press coverage, the engine may hallucinate plausible-but-wrong descriptions.
How to optimize
Be the cited source for queries about your brand. Build a strong knowledge-graph presence (Wikidata + Wikipedia). Submit clear About content + JSON-LD Organization schema.