P3 is the most prominent of the electrical potentials of the human electroencephalogram that are sensitive to psychological variables. According to the most influential current hypothesis about its psychological significance [E. Donchin's], the “context updating” hypothesis, P3 reflects the updating of working memory. This hypothesis cannot account for relevant portions of the available evidence and it entails some basic contradictions. A more general formulation of this hypothesis is that P3 reflects the updating of expectancies. This version implies that P3-evoking stimuli are initially unexpected but later become expected. This contradiction cannot be resolved within this formulation. The alternative “context closure” hypothesis retains the concept of “strategic information processing” emphasized by the context updating hypothesis. P3s are evoked by events that are awaited when subjects deal with repetitive, highly structured tasks; P3s arise from subjects' combining successive stimuli into larger units. The tasks in which P3s are elicited can accordingly be classified in terms of their respective formal sequences of stimuli. P3 may be a physiological indicator of excess activation being released from perceptual control areas.

To understand the endogenous components of the event-related brain potential (ERP), we must use data about the components' antecedent conditions to form hypotheses about the information-processing function of the underlying brain activity. These hypotheses, in turn, generate testable predictions about the consequences of the component. We review the application of this approach to the analysis of the P300 component. The amplitude of the P300 is controlled multiplicatively by the subjective probability and the task relevance of the eliciting events, whereas its latency depends on the duration of stimulus evaluation. These and other factors suggest that the P300 is a manifestation of activity occurring whenever one's model of the environment must be revised. Tests of three predictions based on this “context updating” model are reviewed. Verleger's critique is based on a misconstrual of the model as well as a partial and misleading reading of the relevant literature.