AbstractBackgroundMismatch negativity (MMN) reductions are among the most reliable biomarkers for schizophrenia and have been associated with increased risk for conversion to psychosis in individuals at clinical high risk for psychosis (CHR-P). Here, we adopt a computational approach to develop a mechanistic model of MMN reductions in CHR-P individuals and patients early in the course of schizophrenia (ESZ).MethodsElectroencephalography (EEG) was recorded in 38 CHR-P individuals (15 converters), 19 ESZ patients (≤5 years), and 44 healthy controls (HC) during three different auditory oddball MMN paradigms including 10% duration-, frequency-, or double-deviants, respectively. We modelled sensory learning with the hierarchical Gaussian filter and extracted precision-weighted prediction error trajectories from the model to assess how the expression of hierarchical prediction errors modulated EEG amplitudes over sensor space and time.ResultsBoth low-level sensory and high-level volatility precision-weighted prediction errors were altered in CHR-P and ESZ groups compared to HC. Furthermore, low-level precision-weighted prediction errors were significantly different in CHR-P that later converted to psychosis compared to non-converters.ConclusionsOur results implicate altered processing of hierarchical prediction errors as a computational mechanism in early psychosis consistent with predictive coding accounts of psychosis. This computational model appears to capture pathophysiological mechanisms relevant to early psychosis and the risk for future psychosis in CHR-P individuals, and may serve as a predictive biomarker and mechanistic target for novel treatment development.