A virtual reality environment was created to study psychotic symptoms of patients that experience psychosis. In the environment people could navigate through a bar with a gamepad while wearing a head mounted display. Their task was to find five virtual characters that have a small label number on their chest. The density and ethnic appearance of the virtual characters in the bar was controlled. To study the effect of these two factors a 2 by 2 experiment was conducted with a group of 24 non-patients, and two patients. For the non-patient group results showed a significant main effect for density on participant’s physiological response, their behaviour, reported level of discomfort, and their ability to remember place and location of the numbered avatars. The avatar ethnicity had significant effect on non-patients’ physiological responses. Comparison between the two patients and non-patient group shows difference in physiological responses, behaviour and reported level of discomfort.