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Existing taxonomies classify hallucination by output type, distinguishing intrinsic from extrinsic failures and faithfulness from factuality divergence. These frameworks are descriptively rigorous but do not identify which internal mechanism produced a given instance. This paper analyses hallucination as a structural consequence of three architectural decisions that together form a compound failure system. Self-attention's co-occurrence learning substitutes statistical proximity for semantic meaning and produces entity confusion, fact misattribution, and semantic drift. The maximum likelihood estimation training objective optimises next-token probability without factual constraint, rewarding statistically plausible outputs regardless of their truth value. 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