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To support cognitive function, the CA3 region of the hippocampus performs computations involving attractor dynamics. Understanding how cellular and ensemble activities of CA3 neurons enable computation is critical for elucidating the neural correlates of cognition. Here we show that CA3 comprises not only classically described pyramid cells with thorny excrescences, but also includes previously unidentified 'athorny' pyramid cells that lack mossy-fiber input. Moreover, the two neuron types have distinct morphological and physiological phenotypes and are differentially modulated by acetylcholine. To understand the contribution of these athorny pyramid neurons to circuit function, we measured cell-type-specific firing patterns during sharp-wave synchronization events in vivo and recapitulated these dynamics with an attractor network model comprising two principal cell types. Our data and simulations reveal a key role for athorny cell bursting in the initiation of sharp waves: transient network attractor states that signify the execution of pattern completion computations vital to cognitive function.