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No, the superior olive is not what superior olive oil is made out of. It is, instead, a neural nucleus that's part of the pons (which is itself part of the brain stem) responsible for binaural hearing and localization. That is to say, it makes us able to pinpoint the origin of a sound on the horizontal plane. Each side of the brain has its own superior olive, though they are cross wired.

Sound information moves from the ear, through cranial nerve VIII, and into two structures (on both sides of the brain) known as the dorsal and ventral cochlear nuclei. Up to this point, it's monaural -- each side of the brain deals with its own single sound input. The cochlear nuclei are wired not only to the superior olive on their own side, but that of the other too, so sound recognition becomes binaural at this point. Both superior olives are connected only their own sides' inferior colliculus (and so forth on to the central auditory cortex), so the cross-wiring between the superior olives is the main way that binaural information is processed.

A sound reaching both ears varies in both delay and volume; the ear closer to the sound source receives a louder signal, sooner. (Of course, a sound that comes from either directly in front of or directly behind the head has neither, so we are unable to localize it.) Above about 2000 Hz, the difference in volume is more important for perception, because high frequency sounds travel faster and the head blocks them well enough to give one ear a distinct volume advantage over the other. Below 2000 Hz we use the time delay between each ear, as low frequencies are longer than the head and thus aren't appreciably blocked by it. To calculate this so-called interaural time delay, the superior olive either pays attention to the starting point of the sound (for sharp, well defined sounds) or the peak intensity of the sound.

Comparison of the timing is done by analysis of "delay lines," the nerves that connect each superior olive to the other. When sound goes through a delay line to the superior olive, the temporal difference between it and the sound arriving at the olive directly from the cochlear nucleus is exaggerated -- the delay becomes larger and thus easier to sense. Both superior olives know what delay time corresponds to a given spatial position and computes the horizontal plane location of the sound, which can then be used by the rest of the brain.

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