Actually I think the matrix example perfectly fits into the op dog example.

The machines invented the matrix because humans would riot if the simulation was too perfect or too shitty, so instead it was made perfectly normal. The machines didn't care either way, they just wanted to prevent more random "wakeup" events that were caused when the world was unrealistic.

So we can't know what is good for a dog other than what they tell us. Dog is biting us or whining, we're probably doing the right thing. Sure, you can throw in a bit of human empathy to account for the fact that we cuddle and pet our dogs, but we still know what they like based on what they're telling us.