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The uncanny valley is a phenomenon that occurs in the human psyche and perception with regards to objects that are human-like, usually robots and images, and determines our reaction towards that object. It is still just a hypothesis, and it is stated to the effect of “as an object such as a robot gets more human-like, the response of some observers will become increasingly positive and emphatic, until a point is reached in the robot’s human-likeness beyond which the reactions quickly turn to strong revulsion.”
The uncanny valley concept was first identified by Masahiro Mori, a robotics professor, in 1970 who called it Bukimi no Tani Gensho. The term "uncanny valley" first appeared in the book "Robots: Fact, Fiction, and Prediction" that was written by Jasia Reichardt and published in 1978. The concept has also been linked to Ernst Jentsch’s 1906 essay “On the Psychology of the Uncanny,” which was later elaborated by Sigmund Freud in his 1919 essay “The Uncanny.”
The term refers to the shape of the graph formed when plotting people’s reactions to different objects that continuously increase in their human-like appearance. As the human likeness of the object increases, people's affinity to it increases until a point is reached that the human likeness becomes off-putting, disturbing and weird. This is the uncanny “valley” since there is an immediate drop to affinity and then another immediate rise on the other side, forming the shape of a "V" or a valley.
This is why robots like Pixar's Wall-E and Eve would look cute to most people and robots that are meant to be extremely human-like but not quite are very disturbing – for example the Showa Hanako dental training android and the CB2 child robot – they fall on the uncanny valley region on the graph. These robots are ones that have very human-like faces but have off proportions or off skin color and texture that looks to rubbery, or has a blank stare in its eyes. This is also prevalent in human characters in CG animated movies.