In this preliminary theory of intensity resolution 2 modes of [human] memory operation were postulated: the trace mode and the context-coding mode. A revised model of the context-coding mode explicitly describing a process by which sensations are coded relative to the context and predicting a resolution edge effect was described. The sensation arising from a given stimulus presentation was coded by determining its distance from internal reference or perceptual anchors. The noise in this process, combined with the sensation noise, constituted the limitation on resolution in the model. In the revised model the probability density functions of the decision variable were not precisely Gaussian (and could not be expressed analytically in closed form). The predictions of the model was outlined for 1-interval paradigms and for fixed-level 2-interval paradigms, and estimates of the values of model parameters were derived.