The role of interaction terms in the models of neural networks is crit
ically analyzed. It is demonstrated that the addition of self-interact
ion in the Hopfield model improves the performance of the network. The
network evolves more quickly to an attractor state and is able to ide
ntify the correct image from more corrupt versions. The restriction of
a critical storage capacity also disappears. The quality of retrieval
does deteriorate with the increase in the number of stored pictures.
The deterioration is gradual. One can define a working storage capacit
y. The working storage capacity is found to be significantly higher th
an the critical storage capacity of a corresponding network without se
lf-interaction terms. The model is extended to generalized neurons cap
able of existing in multiple site states. The basis vectors giving the
site states of neurons influence the working of the network through s
calar products. Optimum performance is attained when scalar products s
atisfy a linear constraint relation. The constraint relation permits t
he use of Potts and Ising spin states for basis vectors. Non-Potts spi
n states are allowed in networks of generalized neurons with 4 or more
site states. The retrieval characteristics of networks of generalized
neurons having 2, 3, and 4 site states are investigated through compu
ter simulations. The working storage capacity, the average error in re
trieval, permissible initial corruption and their dependence on the si
ze of the network are determined.