A recent wandering discussion on meditation, mental illness, and dreaming over at the MAPS list produced this great post from Jean-Sébastien Roy summarizing modern hypothoses for the origins of dream-content.
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I recently did a research project where I had to present my findings on closed-loop dreaming in front of my university class. I read articles on activation-synthesis hypothesis and how that totally destroyed the previous conceptions of dreaming which were based on Freudian theories. Although the activation-synthesis hypothesis created a new direction for research that was based more on biology than psychology, certain criticisms were raised about the conclusions of the study. The Hobson & McCarley conclusions in the study titled "The Brain as a Dream-state Generator: An Activation-Synthesis Hypothesis of the Dream Process" was that everything present in the dream content were merely a result of random electrical activation of brain areas during dreaming and has nothing to do with psychology. Recent criticism includes questions of why there is residual content that is manifested in dreams that were part of the waking reality and also reoccuring dream themes. People with PTSD also report dreams that are related to their disorder, so with all these claims, one must ask if there is influences from the outside world into the internal world of dreaming. I would argue that the answer is yes, because clearly these criticisms are well founded. I will also state that the dreaming process is still a closed loop but it is subject to exceptions. Although we are closed off to the outside world while dreaming, stimuli can still filter into our sleeping, the difference is that our threshold for these stimuli are much more elevated. It would be maladaptive for us not to be roused by a strong auditory stimulus as an example, however it would be even more maladaptive to have a dreaming process which was effectively an open-loop.
There is a reason that we are in a state of paralysis when we are in REM stage sleep, it is to prevent us from acting out our dreams. Imagine if dreaming was an open-loop subject to programing from the outside world, we would interact with the outside world much more and would act out our dreams. When people sleep walk, they are not actually in REM stage sleep, they are usually in stage 4 sleep. I hypothesize that when people experience residual content being summoned in dreams, its because our brain is programmed into schemas and neural networks of memory that are created by the environment and when dreaming our brain activates these schemas and reorganizes them into more effective networks (similar to defragmenting your hard-drive on your computer). Some theorize that the brain is going through fight or flight responses that might help our waking survival by practicing certain scenarios. Goal directed behavior is very salient in dreams and this is because the mesolimbic pathways which have many dopaminergic neurons are very activated during dreaming. The frontal lobes which are responsible for reasoning, time perception, and many other logical operations is disabled during REM stage sleep.
It has been shown through PET scans of individuals who are in stage four sleep and PET scans of the same individuals in REM stage sleep, that the most drastic difference between these stages is the disabling of the primary visual cortex (this area deals with processing visual information coming in from the eyes) and activation of the association visual cortex (areas involved in the perception of faces, the memories of objects, form, etc.), but not of the dorsal processing stream which is usually involved in the perception of where an object is. The ventral visual processing stream is activated in a closed-loop fashion with the hypothalamus and related lymbic areas which are involved in memory consilidation. So in effect, memories are being activated as well as objects, faces, and other such forms.
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What? You mean entities from the dreamworld don't sprinkle magic visions into my head with their dream-smoke, giving me a psychic bridge to all dreamers across time and dimension? In your face Jung.
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