This is something interesting I want to share about how people can perceive reality. A couple years ago, this person in my college stabbed and killed another student. Later when the witnesses were being interviewed, many of them said that they thought it was a psychological study and that the two "actors" wanted to see how people around them would respond to a murder. Obviously, this was not true and there actually was a murder. It just goes to show that people sometimes see what they want to see instead of seeing what is actually there. They sometimes perceive reality as a scene from a movie or a play.

I often think that actually movies and plays has a huge influence on our perception of reality. We, humans, are a strange civilisation - we're addicted to fake stories. From the oldest times, myths, fairytales, books, plays, films - are the best selling things, the best entertainment is to listen/watch a story that never happened, I find it so strange. Sometimes it even feels like you have lived several lives, as if you have seen murder so many times that you know exactly what happens. It seems you have experienced all possible love triangles, bank robberies, plane crashes. Most of these things didn't happen and will never happen to you. I even relate it to reincarnation - fake memories, the feeling you have lived more than only here and now.
Maybe it was a bit off topic. But yes, I agree that reality can be perceived differently, especially in extreme situations

Staged events of this kind were a popular feature of academic classes some years ago, so the people who thought this were not out-of-line. Teaching objectives might have been psychological, as you mention, but similar events were used in law school evidence classes to illustrate the infirmities of eyewitness testimony.

I have also seen this sort of thing staged on a televised talk show.

Of course, part of the point was the "shock value," and as your story illustrates, that wears out as more and more people have heard of the practice.

Good for these people not to take everything they see at face value, but, inevitably some things that look like murders really will be murders. Fortunately, those will be only a few in most people's experience.