ScienceDaily has a report on the EU research project called Presenccia. (here) It is led by M. Slater and has contributors from neuroscience, psychology, psychophysics, mechanical engineering and philosophy.

Despite advances in computer graphics, few people would think virtual characters or objects are real. Yet placed in a virtual reality environment most people will interact with them as if they are really there….In trying to understand presence – the propensity of humans to respond to fake stimuli as if they are real – the researchers are not just gaining insights into how the human brain functions. They are also learning how to create more intense and realistic virtual experiences, opening the door to myriad applications for healthcare, training, social research and entertainment…

For one experiment they developed a virtual bar, which test subjects enter by donning a virtual reality (VR) headset or immersing themselves in a VR CAVE in which stereo images are projected onto the walls. As the virtual patrons socialise, drink and dance, a fire breaks out. Sometimes the virtual characters ignore it, sometimes they flee in panic. That in turn dictates how the real test subjects, immersed in the virtual environment, respond.

“We have had people literally run out of the VR room, even though they know that what they are witnessing is not real,” says Slater. “They take their cues from the other characters.”…

All had physical reactions, measured by their skin conductivity, perspiration and heart rate, showing that, at a subconscious level, people’s responses are similar regardless of whether what they are experiencing is real or virtual. The plausibility of the events enhances the sense that what is happening is real. Plausibility, Slater says, is therefore more important to presence than the quality of the graphics in a VR environment.

Like with illusions, knowing that something is not true does not meaning we do not automatically react as if it was true. I think the brain is always trying to attach plausible narratives to its perceptions, and it just carries on doing that even in a sham environment.