What is the term for subconsciously doing something that you think you're dreaming

Paramnesia is defined as "a disorder of the memory or the faculty of recognition in which dreams may be confused with reality" by Collins English dictionary
There are also other related definitions, e.g. a confusion of reality and fantasy (Random House Kernerman Webster's College Dictionary). It can also refer to an inability to remember the meaning of words. So with all those different meanings it may not be the most precise word to use.

Dream-reality confusion (DRC) is a term found in the medical literature.(2)(3) I've also seen "wake-dream confusion" alongside DRC in a less academic source(4), but DRC seems more common.

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References:

(1) Collins English Dictionary – Complete and Unabridged, 12th Edition 2014 © HarperCollins Publishers 1991, 1994, 1998, 2000, 2003, 2006, 2007, 2009, 2011, 2014

(2) "Dream-reality confusion in borderline personality disorder: a theoretical analysis", Frontiers in Psychology 2015,

(3) "The phenomenology of dream–reality confusion: A quantitative study." APA PsycNet 2018

(4) "Narcoleptics Can Have a Hard Time Telling Dreams From Reality", Vice, July 7, 2017

I think that the time, and activities, asked of here tend to suggest simple sleepwalking, which, I guess, is about dreaming earlier in the sleep cycle.

Here we have that

Sleepwalking usually occurs early in the night — often one to two hours after falling asleep. It's unlikely to occur during naps. A sleepwalking episode can occur rarely or often, and an episode generally lasts several minutes, but can last longer ...

Sometimes, a person who is sleepwalking will:

Do routine activities, such as getting dressed, talking or eating

Leave the house

Drive a car

Engage in unusual behavior, such as urinating in a closet

Engage in sexual activity without awareness

Get injured, for example, by falling down the stairs or jumping out a window

Become violent during the period of brief confusion immediately after waking or, occasionally, during sleepwalking

I don't think this is a memory issue, something from one day to the next.

From https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2958868/ here.

This is a specific type of parasomnia, per the recent American medical classification. This occurs during NREM (non-rapid eye movement) sleep, usually the first stage of sleep, and specifically Stage III-IV of NREM. Your friend's case is somewhat unusual. The part where he drives is dangerous, so I think it would behoove him to see a specialist, if you care to inform him. |

I am a retired psychiatrist, and I take an interest in such things because it runs in my family. My father sleepwalked and also sleep-ate. He went across the house to the kitchen, removed ingredients from the refrigerator, ate the sandwich, and then came to the middle of the house, where he fell asleep on the sofa. We only knew he ate because he left a jar of mustard out with the lid off all the time. We already knew he sleepwalked, since he ended up on the sofa, but since we had a one-story house, there was no danger. I had sleep terrors as a young child, I walked in my sleep, and danced in my, sleep, which are all parasomnias of NREM sleep. I have sleep walked a few times as an adult, once down a very long marble stair case, so I do not sleep upstairs any more. My brother sleep walks also.

We have never needed any treatment, but your friend's driving sounds dangerous, and there are treatments. I hope this helps and is within guidelines.