Category formation is constrained by three factors: the
perceptual structure of the domain being categorized, the
limitations and biases of the learner, and the goals that
trigger the learning process in the first place. Many
studies of categorization have paid attention to the effects
of the structure of the world and some to the biases due to
the learner's prior knowledge. This paper explores the
third factor: how the goals of the agent at the time of the
learning episode affect what categories are formed. In
particular it presents an information theoretical account
that views categories as a means to increase the agent's
chances of achieving its goals. One of the predictions of
the theory is that information gain, the average reduction
of uncertainty induced by a category, is maximized when
the domain is partitioned into about 3 categories, the
closest integer to the irrational number e. This prediction
is confirmed by evidence derived from anthropological
studies of folk classifications of animal and plants by
different societies from around the world, and also by an
informal observation of the behavior of cognitive
scientists. Interestingly, e also emerges from
optimization analyses of memory search as well as from
experimental work on memory retrieval.