Not All Needles Are Found: How Fact Distribution and Don't Make It Up Prompts Shape Retrieval, Reasoning, and Hallucination in Long-Context LLMs

arXiv:2601.02023v2 Announce Type: replace Abstract: As Large Language Models (LLMs) increasingly utilize massive context windows as working memory for autonomous tasks, their reliability fluctuates significantly depending on how information is distributed in real-world corpora. We investigate how fact placement, corpus-level distributions, and anti-hallucination ("Don't Make It Up") prompts influence model behavior by introducing a model-agnostic extended needle-in-a-haystack benchmark designed for scalability, which we apply to evaluate Gemini-2.5-flash, ChatGPT-5-mini, Claude-4.5-haiku, and Deepseek-v3.2-chat. Unlike prior work, we separately evaluate literal extraction, logical inference, and hallucination risk. We identify two critical failure modes: Distributional Collapse, where performance degrades significantly when evidence is dispersed; and a Safety Tax, where anti-hallucination prompts cause over-conservative refusal of present facts and evidence, sharply reducing accuracy. Our results suggest that many failures stem from ineffective context utilization, as models struggle to prioritize relevant information even when it is present. These findings highlight the need for model-specific robustness and effective context management to ensure reliable deployment in long-horizon agentic workflows.