When you're touched, the nerve endings under your top layer of skin, or epidermis, send electrical signals to the brain. When we are tickled the somatosensory cortex picks up the signals to do with pressure, but the anterior cingulated cortex also analyses the signals. This part of the brain governs pleasurable feelings.
Evolutionary biologists and neuroscientists believe that we laugh when we are tickled because the part of the brain that tells us to laugh when we experience a light touch, the hypothalamus, is also the same part that tells us to expect a painful sensation. Laughing when tickled in our sensitive spots (under the arms, near the throat and under our feet) could be a defensive mechanism. Research suggests that we have evolved to send this signal out to show our submission to an aggressor, to dispel a tense situation and prevent us from getting hurt.
So why can't we tickle ourselves? The cerebellum at the back of the brain tells you that you're about to self-tickle so the brain doesn't waste up precious time interpreting the signals from the tickle.
Bonus fact: Gorillas laugh like us when they're tickled. Rats laugh when they're tickled too, but they giggle at 50kHz, which is out of our audio range.
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