Abstract
The ability to use subjective, latent contextual representations to influence decision-making is crucial for everyday life. The hippocampus is hypothesized to bind together otherwise abstract combinations of stimuli to represent such latent contexts, to support the process of hidden state inference. Yet evidence for a role of the hippocampus in hidden state inference remains limited. We found that the ventral hippocampus is required for mice to perform hidden state inference during a two-armed bandit task. Hippocampal neurons differentiate the two abstract contexts required for this strategy in a manner similar to the differentiation of spatial locations, and their activity is essential for appropriate dopamine dynamics. These findings offer insight into how latent contextual information is used to optimize decisions, and they emphasize a key role for the hippocampus in hidden state inference.