InterpDetect: Interpretable Signals for Detecting Hallucinations in Retrieval-Augmented Generation

Retrieval-Augmented Generation (RAG) integrates external knowledge to mitigate hallucinations, yet models often generate outputs inconsistent with retrieved content. Accurate hallucination detection requires disentangling the contributions of external context and parametric knowledge, which prior methods typically conflate. We investigate the mechanisms underlying RAG hallucinations and find they arise when later-layer FFN modules disproportionately inject parametric knowledge into the residual stream. To address this, we explore a mechanistic detection approach based on external context scores and parametric knowledge scores. Using Qwen3-0.6b, we compute these scores across layers and attention heads and train regression-based classifiers to predict hallucinations. Our method is evaluated against state-of-the-art LLMs (GPT-5, GPT-4.1) and detection baselines (RAGAS, TruLens, RefChecker). Furthermore, classifiers trained on Qwen3-0.6b signals generalize to GPT-4.1-mini responses, demonstrating the potential of proxy-model evaluation. Our results highlight mechanistic signals as efficient, generalizable predictors for hallucination detection in RAG systems.

FRED: Financial Retrieval-Enhanced Detection and Editing of Hallucinations in Language Models

Hallucinations in large language models pose a critical challenge for applications requiring factual reliability, particularly in high-stakes domains such as finance. This work presents an effective approach for detecting and editing factually incorrect content in model-generated responses based on the provided context. Given a user-defined domain-specific error taxonomy, we construct a synthetic dataset by inserting tagged errors into financial question-answering corpora and then fine-tune four language models, Phi-4, Phi-4-mini, Qwen3-4B, and Qwen3-14B, to detect and edit these factual inaccuracies. Our best-performing model, fine-tuned Phi-4, achieves an 8% improvement in binary F1 score and a 30% gain in overall detection performance compared to OpenAI-o3. Notably, our fine-tuned Phi-4-mini model, despite having only 4 billion parameters, maintains competitive performance with just a 2% drop in binary detection and a 0.1% decline in overall detection compared to OpenAI-o3. Our work provides a practical solution for detecting and editing factual inconsistencies in financial text generation while introducing a generalizable framework that can enhance the trustworthiness and alignment of large language models across diverse applications beyond finance. Our code and data are available at https://github.com/pegasi-ai/fine-grained-editting.