Effects of Hallucination Risk and Algorithm Aversion on Organizational Knowledge Seeking with Generative AI

Knowledge transfer remains a persistent challenge in knowledge management. One crucial component is knowledge seeking, defined as the willingness to acquire new knowledge. The rise of generative artificial intelligence (GenAI) will transform knowledge seeking by enabling instant, user-tailored information retrieval. However, these benefits come with risks, including hallucinations and algorithm aversion, which require critical attention in the context of information retrieval. Based on social exchange theory and the decomposed theory of planned behavior, we hypothesize that the risk of hallucinations and algorithm aversion will affect the drivers of knowledge seeking with GenAI. A field study ( n = 263) conducted in an organizational setting shows that perceived hallucination risk and algorithm aversion have significant negative effects on several drivers of system adoption and use. The findings highlight the need to address these risks to foster individual knowledge-seeking behavior and enable the effective integration of GenAI as a component of knowledge management systems.