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It should be "confabulation", since that's not carting along the notion of false sensory input.

Humans also confabulate but not as a result of "hallucinations". They usually do it because that's actually what brains like to do, whether it's making up stories about how the world was created or, more infamously, in the case of neural disorders where the machinery's penchant for it becomes totally unmoderated and a person just spits out false information that they themselves can't realize is false. https://en.m.wikipedia.org/wiki/Confabulation