Abstract
Neural circuits construct internal 'world-models' to guide behavior. The predictive processing framework posits that neural activity signaling sensory predictions and concurrently computing prediction-errors is a signature of those internal models. Here, to understand how the brain generates predictions for complex sensorimotor signals, we investigate the emergence of high-dimensional, multi-modal predictive representations in recurrent networks. We find that robust predictive processing arises in a network with loose excitatory/inhibitory balance. Contrary to previous proposals of functionally specialized cell-types, the network exhibits desegregation of stimulus and prediction-error representations. We confirmed these model predictions by experimentally probing predictive-coding circuits using a rich stimulus-set to violate learned expectations. When constrained by data, our model further reveals and makes concrete testable experimental predictions for the distinct functional roles of excitatory and inhibitory neurons, and of neurons in different layers along a laminar hierarchy, in computing multi-modal predictions. These results together imply that in natural conditions, neural representations of internal models are highly distributed, yet structured to allow flexible readout of behaviorally-relevant information. The generality of our model advances the understanding of computation of internal models across species, by incorporating different types of predictive computations into a unified framework.