In this review, we explore how contextual modulations of sensory processing are implemented within the local cortical circuit. We focus on contextual influences of global arousal state (e.g. how alert am I?), sensory predictions (e.g. which stimuli do I expect?), and top-down attention (what is relevant to me?). We review recent literature suggesting that these operations are implemented throughout sensory cortices, and are mediated by excitatory and inhibitory local circuits. By focusing on the circuit mechanisms of contextual modulation operations, we may begin to understand how mutations in GABAergic interneurons and alterations in neuromodulatory signaling lead to specific deficits of information processing in neuropsychiatric disease.
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