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Abstract Success in many real-world tasks depends on our ability to dynamically track hidden states of the world. We hypothesized that neural populations estimate these states by processing sensory history through recurrent interactions which reflect the internal model of the world. To test this, we recorded brain activity in posterior parietal cortex (PPC) of monkeys navigating by optic flow to a hidden target location within a virtual environment, without explicit position cues. In addition to sequential neural dynamics and strong interneuronal interactions, we found that the hidden state - monkey’s displacement from the goal - was encoded in single neurons, and could be dynamically decoded from population activity. The decoded estimates predicted navigation performance on individual trials. Task manipulations that perturbed the world model induced substantial changes in neural interactions, and modified the neural representation of the hidden state, while representations of sensory and motor variables remained stable. The findings were recapitulated by a task-optimized recurrent neural network model, suggesting that task demands shape the neural interactions in PPC, leading them to embody a world model that consolidates information and tracks task-relevant hidden states. 

We do not understand how neural nodes operate and coordinate within the recurrent action-perception loops that characterize naturalistic self-environment interactions. Here, we record single-unit spiking activity and local field potentials (LFPs) simultaneously from the dorsomedial superior temporal area (MSTd), parietal area 7a, and dorsolateral prefrontal cortex (dlPFC) as monkeys navigate in virtual reality to ‘catch fireflies’. This task requires animals to actively sample from a closed-loop virtual environment while concurrently computing continuous latent variables: (i) the distance and angle travelled (i.e., path integration) and (ii) the distance and angle to a memorized firefly location (i.e., a hidden spatial goal). We observed a patterned mixed selectivity, with the prefrontal cortex most prominently coding for latent variables, parietal cortex coding for sensorimotor variables, and MSTd most often coding for eye movements. However, even the traditionally considered sensory area (i.e., MSTd) tracked latent variables, demonstrating path integration and vector coding of hidden spatial goals. Further, global encoding profiles and unit-to-unit coupling (i.e., noise correlations) suggested a functional subnetwork composed by MSTd and dlPFC, and not between these and 7a, as anatomy would suggest. We show that the greater the unit-to-unit coupling between MSTd and dlPFC, the more the animals’ gaze position was indicative of the ongoing location of the hidden spatial goal. We suggest this MSTd-dlPFC subnetwork reflects the monkeys’ natural and adaptive task strategy wherein they continuously gaze toward the location of the (invisible) target. Together, these results highlight the distributed nature of neural coding during closed action-perception loops and suggest that fine-grain functional subnetworks may be dynamically established to subserve (embodied) task strategies.