Researchers have begun documenting what they dub the "Truman syndrome," a delusion afflicting people who are convinced that their lives are secretly playing out on a reality TV show. Scientists say the disorder underscores the influence pop culture can have on mental conditions.Other examples are thinking your life is the Matrix, an ARG, an A&E documentary.
If you break the delusion down, there are two primary characteristics: someone else, more powerful, is observing and orchestrating; and this is not your actual life, your actual life is something else.
When you phrase it like this, the delusion becomes revealed: it's regression into childhood. It doesn't discount the delusional aspect, but understanding it as a regression helps make sense of it.
By analogy, it's a conspiracy theory. Conspiracy theories provide two very important psychic comforts. First, if someone else is controlling things, then your failures are not entirely your fault. Second, it is a proxy-parent; it is comforting to know that there are powerful individuals closely following, monitoring, and influencing everything. Suddenly, there is no catastrophe that won't be averted; suddenly life has meaning, even if it isn't one you pick.
One question is to what extent one changes their own behavior to fit their role: do you play to the camera? If you're on a reality TV show, do you then also choose to dress more provocatively; talk in soundbites; make relationships the main focus of your day to day life, etc? A conscious decision to act more superficially than you would otherwise?
I'd argue that non-delusional people do this already, though much less. In tiny ways, we act like someone else is watching, we narrate or soundtrack our lives, which is fine; but the types of narration and the types of music all come from what already exists-- TV, movies, etc.
It's the Wittgenstein argument about language and thought, applied to the media.
The "medium is the message" is now the medium is the viewer. Control the medium, and you control the viewer.