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The effect is most commonly demonstrated with a device known as Benham's top. It can also be seen in stroboscopic lights when flashes are set at certain critical speeds. Rotating fan blades, particularly aluminum ones, can also demonstrate the effect; as the fan accelerates or decelerates, the colors appear, drift, change and disappear. The stable running speed of the fan does not (normally) produce colors, suggesting that it is not an interference effect with the frequency of the illumination flicker.
The effect was noted by Gustav Fechner and Hermann von Helmholtz and propagated to English-speakers through Charles Benham's invention of his top. The perceptual mechanism of Fechner color is not entirely understood. Florence Winger Bagley was one of the early investigators of this phenomenon. 
When the disk is spun, arcs of pale color are visible at different places on the disk. One possible reason people see colors may be that the color receptors in the human eye respond at different rates to red, green, and blue. Or, more specifically, that the latencies of the center and the surrounding mechanisms differ for the different types of color-specific ganglion cells.
The phenomenon originates from neural activity in the retina and spatial interactions in the primary visual cortex, which processes pattern recognition (von Campenhausen & Schramme, 1995). Research indicates that the blue/yellow opponent process accounts for all the different PIFCs (Schramme, 1992).
- Bagley, Florence Winger (1902). "An investigation of Fechner's colors". American Journal of Psychology. 14 (4): 488–525.