The Hallucination Hypothesis is actually a very old hypothesis that has been around since the very beginning of Biblical studies. It posits that the post-mortem visions of Jesus could have been perfectly natural hallucinations. It was popularised by the great biblical scholar and theologian David Strauss, and enjoyed a long life in academia until the latter half of the 20th century, when the secular alternatives to the resurrection began to be rejected. However, very recently these alternative theories have resurfaced and are once again being critically challenged.
Recent defenses of the Hallucination Theory can be found in the works of Gerd Ludemann and the late Michael Goulder. However, the best defense of the theory can be found in Dale Allison's book Resurrecting Jesus (2005). Although a Christian, Allison believes that the Resurrection appearances can be plausibly explained away as a part of a wider phenomena- apparitions of the dead. Whether they are veridical or not, this data seems to indicate that people can experience visions of the recently deceased, and that these visions often appear very physical in nature. Regardless of whether you find this theory persuasive, it is a must read for anyone interested in the Resurrection. Indeed, even famed apologist William Lane Craig admits in his review of Allison's book that:
"I’ve never seen a better presentation of the case for scepticism about Jesus’ resurrection than in Allison’s Resurrecting Jesus: The Earliest Christian Tradition and Its Interpreters (New York: T. & T. Clark, 2005). He’s far more persuasive than Crossan, Lüdemann, Goulder, and the rest who actually deny the historicity of Jesus’ resurrection. "
So, if you are interested in the Hallucination Hypothesis, I would suggest reading Dale Allisons book Resurrecting Jesus. Than, I would suggest reading William Lane Craig's two reviews of the book here and here, as well as Gary Habermas' review here. Finally, try to get your hands on a copy of Dale Allisons own essay further defending his views called "The Resurrection of Jesus and rational apologetics". Email me if you if you want a copy of it here.