In his 2016 book, Homo Deus, Harari speaks of where the differences lie between the imaginative capacities of humans and non-human animals. One aspect is that while animals and humans experience 'objective reality' (e.g., trees) and 'subjective reality' (e.g., feeling pain), only humans experience 'intersubjective realities' (e.g., human rights, corporations, money). The latter are also referred to as fictional realities. And he uses the term 'entities' in describing what is generated within the intersubjective sphere - a term usually reserved for that which exists. 

"Intersubjective entities depend on communication among many humans rather than on the beliefs and feelings of individual humans." (page 168)

"We want to believe that our lives have some objective meaning, and that our sacrifices matter to something beyond the stories in our head. Yet in truth the lives of most people have meaning only within the network of stories they tell one another." (page 170)

"Meaning is created when many people weave together a common network of stories." (page 170)

"People constantly reinforce each other's beliefs in a self perpetuating loop. Each round of mutual confirmation tightens the web of meaning further, until you have little choice but to believe what everyone else believes." (page 170-171)

So how can one tell reality from fiction? "How do you know if an entity is real? Very simple - just ask yourself, 'Can it suffer?'" (page 206)

Fiction cannot experience suffering.

Harari posits that the limitations of imagination in animals are such that they may imagine only what exists in the world. "Animals are confined to the objective realm and use their communication systems merely to describe reality. Sapiens use language to create completely new realities." (page 175)

Harari also points out the central influence of language, and writing in particular, in the creation of the intersubjective.

"Writing ... facilitated the appearance of powerful fictional entities that organized millions of people and reshaped the reality ... Simultaneously, writing also made it easier for humans to believe in the existence of such fictional entities, because it habituated people to experiencing reality through the mediation of abstract symbols." (page 190)

"Written language may have been conceived as a modest way of describing reality, but it gradually became a powerful way to reshape reality." (page 194)

There is no question that this remarkable book is doing the very same to the minds of its readers. For it too reshapes our experience of reality.

One of the many abilities we take for granted about ourselves is our astounding capacity to immerse ourselves in fictional worlds through diverse mediums (e.g., books, films, games), and re-emerge from them back into our reality with no sense of confusion about what is real and what is not. We can be so deeply emotionally absorbed in these fictional realms so as to weep, giggle, feel fearful or be shocked while experiencing the events that come to pass in these worlds. Yet, when the experience is over, we come out of it unscathed in terms of our understanding of what is real.

How is this possible? And can neuroscience guide us in arriving at the right answers?

I contributed a book chapter to an edited volume Neuroscience in Intercultural Contexts that was published towards the end of 2015. In it, I explore factors that facilitate our understanding of the reality/fiction distinction on the basis of neuroscientific investigations of this question. I particularly focus on the dominant role played by the factor of personal significance/relevance in social contexts in bringing about this implicit knowledge.

The chapter largely derives from some of my previous work:
1. Abraham A, von Cramon DY & Schubotz RI (2008). Meeting George Bush versus meeting Cinderella: The neural response when telling apart what is real from what is fictional in the context of our reality. Journal of Cognitive Neuroscience, 20 (6), 965-976. 
2. Abraham A & von Cramon DY (2009) Reality = Relevance? Insights from spontaneous modulations of the brain’s default network when telling apart reality from fiction. PLoS ONE, 4(3), e4741: 1-9.
3. Abraham A (2013). The world according to me: Personal relevance and the medial prefrontal cortex. Frontiers in Human Neuroscience, 7, 341: 1-4.

I have also explored related issues in external blogposts following the Salzburg 547 session on "The Neuroscience of Art: What are the the Sources of Creativity and Innovation?" in February 2015.
1. The Four Walls of an Empiricist
2. The Meandering Imagination