I doubt anyone is familiar with Dr. Eagleman's research on time perception (I know it was once mentioned in a Cracked article), but you all should read this:
Does Time Really Slow Down during a Frightening Event?
Basically, time doesn't actually slow down when we trip or when something scary happens, we only remember it as being slow motion!
Knowing this, we can explain the length of our dreams along with the lack of time dilation by knowing that they may not have ever happened, they could just be very short dreams that we
think had a lot of stuff happen in them.
Dr. Eagleman gave a great personal example. He said once he was on a long car ride and nodded off to sleep. He was asleep for less then a second, as he woke himself up when he jerked his head back up. But in that <1 second dream, he experienced a ton of emotions. He had done something bad, and was feeling very guilty about it. I don't remember exactly what he said he had done, but he had done something like failed to do something.
I know we all have had similar experiences. Short dreams that had a ton of context.
If all of this is true, then our dreams may only be seconds long, but have so much invented pretext that we are convinced that we experienced the pretext as well.
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