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Imaginations and perceptions are normally distinguishable by the fact that images are usually much less vivid than perceptions. Normally, perceptions seem real and images seem -- imaginary. How real something appears depends mainly on its relative vividness and experienced vividness is probably a function of intensity of neural activation. Thus, we may conjecture that images usually involve a lesser degree of neural activation than the corresponding perceptions, and this results in a lesser degree of experiential reality for imagination. At least two factors contribute to this state of affairs: one is that while we are awake sensory input produces much higher levels of activation than imaginary input. Imagination interferes with perception in the same modality (Perky, 1910; Segal, 1971) and we may suppose the reverse is true as well. Another more speculative factor favoring perceptual processes over imagination in the waking state is the existence of a neural system to inhibit the activation (vividness) of memory images while perception is active. Evolutionary considerations make such a system likely; it would obviously be extremely maladaptive for an organism to mistake a current perceptual image of a predator for the memory of one (LaBerge, 1985). Mandell (1980) has implicated serotonergic neurons as part of a system that normally inhibits vivid images (hallucinations), but is itself inhibited in REM sleep, allowing dreamed perceptions (i.e., images) to appear as vividly real as perceptions. In REM, also, sensory input is actively suppressed preventing competition from perceptual processes.
From this we can see that whether awake or asleep we are in an equally stable state, in both we are either almost wholly relying on external or internal stimuli but are still slightly immersed in the other one. There are actually four clear states between awake and dreaming