An attempt is made to develop a quantitative theory of intensity resolution that is applicable to a wide variety of experiments on discrimination, identification, and scaling. The theory is composed of a Thurstonian decision model, which separates sensitivity from response bias, and an internal‐noise model, which separates sensory limitations from memory limitations. It is assumed that the subject has two memory operating modes, asensory‐trace modeand acontext‐coding mode, and that the use of these two modes is determined by the characteristics of the experiment. In one‐interval paradigms, it is assumed that the context‐coding mode is used, and the theory relates resolution to the total range of intensities in the stimulus set. In two‐interval paradigms, it is assumed that the two modes are combined, and the theory relates resolution to both the total intensity range and the duration between the two intervals. The theory provides, among other things, a new interpretation of the7 ± 2 phenomenon.