"Hallucinate" is an interesting way to position it: It could just as easily be positioned as "too ignorant to know it's wrong" or "lying maliciously".

Indeed, the subjects on which it "hallucinates" are often mundane topics which in humans we would attribute to ignorance, i.e. code that doesn't work, facts that are wrong, etc. Not like "laser beams from jesus are controlling the president's thoughts" as a very contrived example of something which in humans we'd attribute to hallucination.

idk, I'd rather speculatively invest in "a troubled genius" than "a stupid liar" so there's that