In schizophrenia, verbal auditory hallucinations (VAH) form one of the most distressing and hard-to-treat symptoms. The causes and neural basis of VAH are not well known and recruitment to schizophrenia research in this area is difficult. As an alternative, the personality construct of schizotypy in healthy individuals is a potential surrogate for schizophrenia. In one model of schizophrenia, schizotypy is considered a trait shared across the population, with high levels representing a risk factor for schizophrenia-related illness. Attenuated psychosis-like symptoms (including VAH) occur in some nonclinical individuals, without causing distress or impairment. Another theory proposes schizotypy as a liability to schizophrenia found in 10% of individuals, conferred by a heritable neural defect arising in embryo; schizophrenia may later develop under the influence of an environmental event. Within this context, my thesis marries two interests: (1) in the genesis of VAH through misattribution of internal auditory stimuli (a person's own thought) due to deficits in sensory processing and attention; (2) in schizotypy as a schizophrenia surrogate in research, due to its theoretical affinity with schizophrenia. Specifically, I sought evidence from electroencephalography (EEG) studies to support the use of schizotypy to examine problems in auditory processing and attention in schizophrenia, and enquired whether nonclinical schizotypy is a genuine surrogate for schizophrenia. A meta-analysis of EEG microstates associated with schizophrenia showed that microstate deficiency may contribute to VAH. Meta-regression of the same data revealed that microstate deficits associated with schizophrenia did not vary with level of schizotypy. Then, an event-related potential study investigated an index of early auditory change detection that arises with or without conscious attention to a stimulus: the mismatch negativity (MMN). I tested whether MMN amplitude or latency varied with level of schizotypy in a nonclinical sample. Results weakly supported variation in some MMN metrics consistent with deficits in schizophrenia but not in others. Overall, nonclinical schizotypy is unlikely to represent a valid surrogate for schizophrenia in MMN research, at least on present evidence.