Curiously, both of those theories above could be true at the same time: Your brain suffers prediction error or simply unexpected touch error that causes you to

Curiously, both of those theories above could be true at the same time: Your brain suffers prediction error or simply unexpected touch error that causes you to go into a little frenzy of laughter and wriggling at the sensation, so in response it developed a body-wide message response that says "self touching coming up, take it in stride", specifically because we all need to touch ourselves all the time and can't afford to suffer the tickling caused by light, sudden touching.