GPT 4 will admit to not knowing things in many cases where 3.5turbo does not (tested the same prompt), and either will stop there or go off on a "but if it did exist it might go something like this" type continuation. It still hallucinates a lot, but it's not at all clear that this will be all that difficult an issue to solve given the progress.

We generally only hallucinate while dreaming / using our imagination. And we can distinguish those two states. Admitting lack of knowledge is of course good but, for example, if you ask it to write some code that isn’t boilerplate API integrations, it’ll do so happily even when it’s wildly wrong and it can’t tell the difference and that is also the case with GPT4 afaik. Moreover, you can’t solve it through prompt engineering because there’s clearly a lack of context it’s unable to understand to figure out what non trivial thing your asking it.

The point is there's been progress in making it admit when it doesn't know, and we simply don't know how fast that will improve in future version. It may continue to be an issue, or turn out to be easily solved. The improvement with GPT4 does suggest it is at least possible to make it recognise its limits.

There is ongoing promising work that shows this can be improved a lot: https://arxiv.org/abs/2210.03629