This research proposes treating LLM hallucinations as an engineering product attribute that requires domain-specific regulation standards.

• Recognizes hallucinations as an inherent feature of LLMs that poses significant risks in critical domains
• Demonstrates that net welfare improves when maximum acceptable hallucination levels are established
• Analyzes LLMs as a new class of engineering products requiring appropriate safety standards
• Suggests domain-specific regulation frameworks based on risk severity

For medical applications, this research is crucial as hallucinated content in clinical settings could directly impact patient safety and treatment decisions, making standardized hallucination thresholds essential for responsible AI deployment.

Maximum Hallucination Standards for Domain-Specific Large Language Models