One of the explanations in the irrationality game thread for UFOs and other paranormal events seen by multiple people at once, like the was mass hysteria. This is also a common explanation given for any seemingly paranormal event that multiple people have independently witnessed.
But mass hysteria is mostly known from incidents where people hysterically believe they have some disease, or have some hysterical delusion (false belief). In cases where people report seeing something or having a hallucination, it tends to be a few people across a large society. For example, when reports of Spring-Heeled Jack were going around England, multiple people claimed to have seen Spring-Heeled Jack, but there were no cases of hundreds of people seeing him simultaneously; therefore, the hysteria could have selected for people who were already a little bit crazy, or it could just have been that out of millions of English people a few of them were willing to say anything to get attention.
Conformity pressures can cause people to misinterpret borderline perceptions - for example, if someone says a random pattern of dots form Jesus' face, I have no trouble believing that, thus primed, people will be able to find Jesus' face in the dots. But it's a much bigger leap to assert that if I say "Jesus is standing right there in front of you" with enough conviction, you'll suddenly see him too.
Does anyone have any evidence that mass hysteria can produce a vivid hallucination shared among multiple otherwise-sane people?
One thing I've personally witnessed is people claiming to have had the exact same vivid dream the night before. I'm talking stuff like playing scrabble with Brad Pitt and Former President Carter on the summit of mount McKinley, so it seems unlikely that they were both prompted by the same recent event. Assuming that these people haven't been primed until after the fact, I would expect even stronger effects to be possible for those who have.
Intuitively, I would expect memories of dreams to be different than memories of reality - since dreams themselves are just confabulations in the first place, and memories of them fade rapidly, it's not entirely surprising that people trying to remember their dreams would get confabulations instead.
This suggests a cause for many cases of mass hallucination: sleep deprivation. It's known to cause hallucinations, and in some settings it happens to whole crowds of people at once. Add an ambiguous stimulus and a few people shouting out their interpretation, and you have all the ingredients for a shared hallucination.