40-Hz auditory steady-state response (ASSR) data and modeling analysis. (A) 40-Hz ASSR time courses at electrode Fz for control subjects (Con) (n = 92; blue), people with schizophrenia diagnoses (PScz) (n = 94; red), and first-degree relatives (Rel) (n = 42; green). Sixteen clicks were played at 40 Hz, starting at 0 ms. Group differences in the baseline deflection (not modeled subsequently) emerge after around 250 ms, shown with red bars (Con vs. PScz) and green bars (Con vs. Rel), both p < .05 (t tests per time point, uncorrected). (B) γ (35–45 Hz) frequencies with the strongest power (in the normalized spectrum) in each participant are shown in a histogram. (C) These normalized time frequency plots show the ∼40 Hz responses around 100 to 400 ms. The PScz and Rel plots have areas of difference from Con encircled in black; the Rel plot has areas of difference from PScz encircled in white (p < .05, t tests at each time and frequency). (D) The left plots show the bilateral primary auditory cortex (A1) (transverse temporal gyrus) sources chosen following source localization [±50 -12 4]. The 40-Hz ASSR model structure is on the right: bilateral sources in A1. (E) Left: to improve the dynamic causal modeling fit of the cross spectral densities in bilateral A1 in this nonstandard paradigm, we used empirical priors (also see Figure S1A) for J(1), the contribution spiny stellate cells make to the electroencephalography (EEG) signal; S, the gain of the neuronal activation function; T, population time constants; and w, the width of the ∼40 Hz Gaussian bump. The plot shows that the full model (with all the empirical priors) is superior to other models that used standard values for their respective priors (or for -w, 1 Hz instead of 4 Hz). Right: a histogram of R2s for all participants for the winning model. (F) Parametric empirical Bayes (PEB) analysis indicated that PScz + Rel > Con showed increased neural transmission delays in left (L) A1. (G) Left: PEB analysis (in the same format as Figure 3H) indicated that PScz + Rel > Con (a psychosis genetic risk effect) had decreased superficial pyramidal (sp)–inhibitory interneuron (ii) connectivity. Right: PScz > Rel (a psychosis diagnosis effect) shows decreased sp self-inhibition in bilateral A1. (H) PEB analysis in PScz, showing that abnormal auditory percepts are associated with disinhibition of the sp-ii circuit (and increased sp self-inhibition in L A1). All effects shown in (F), (G), and (H) are also present without the addition of age, sex, and smoking covariates (p > .95) and with inclusion of chlorpromazine dose equivalents as a covariate. dp, deep pyramidal; Freq, frequency; Pow, power; R, right.