Where in the brain does the ERN originate? Using functional magnetic resonance imaging, among other imaging methods, researchers have repeatedly found that error recognition takes place in the medial frontal cortex, a region on the surface of the brain in the middle of the frontal lobe, including the anterior cingulate. Such studies implicate this brain region as a monitor of negative feedback, action errors and decision uncertainty—and thus as an overall supervisor of human performance.

The neurotransmitter dopamine plays a major role in our ability to learn from our mistakes.

Hmmmm there are many people I know who could use a big dose of dopamine...

Its the decrease that makes you learn.