I skimmed about 2/3rds into the article and there has been no proposed mechanism or examples of what an LLM might output that could cause psychosis. Doesn't seem particularly credible.

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I concur. I don't think these rare examples were particularly stable in the first place

Agreed. But I can see how it would trigger or worsen it. It does tend to agree with whatever you say and make excuses for why it's right.