Schematic summary of the conceptual basis of DCM. The dynamics in a system of interacting neuronal populations (left lower panel), which are not directly observable by fMRI, is modeled using a bilinear state equation (right upper panel). Integrating the state equation gives predicted neural dynamics (z) that enter a model of the hemodynamic response (λ) to give predicted BOLD responses (y) (right lower panel). The parameters at both neural and hemodynamic levels are adjusted such that the differences between predicted and measured BOLD series are minimized. Critically, the neural dynamics are determined by experimental manipulations. These enter the model in the form of external inputs (left upper panel). Driving inputs (u1; e.g. sensory stimuli) elicit local responses directly that are propagated through the system according to the intrinsic connections. The strengths of these connections can be changed by modulatory inputs (u2; e.g. changes in cognitive set, attention, or learning). In this figure, the structure of the system and the scaling of the inputs are arbitrary. This figure was reproduced, with permission, from Figure 1 in [36].