Computer simulations of layers I and II of pirifonn (olfactory) cortex indicate that this biological network can generate a series of distinct output responses to individual stimuli, such that different responses encode different levels of information about a stimulus. In particular, after learning a set of stimuli modeled after distinct groups of odors, the simulated network's initial response to a cue indicates only its group or category, whereas subsequent responses to the same stimulus successively subdivide the group into increasingly specific encoding of the individual cue. These sequences of responses amount to an automated organization of perceptual memories according to both their similarities and differences, facilitating transfer of learned information to novel stimuli without loss of specific information about exceptions. Human recognition performance robustly exhibits such multiple levels: a given object can be identified as a vehicle, as an automobile, or as a Mustang. The findings reported here suggest that a function as apparently complex as hierarchical recognition memory, which seems suggestive of higher 'cognitive' processes, may be a fundamental intrinsic property of the operation of this single cortical cell layer in response to naturally-occurring inputs to the structure. We offer the hypothesis that the network function of superficial cerebral conical layers may simultaneously acquire and hierarchically organize information about the similarities and differences among perceived stimuli. Experimental manipulation of the simulation has generated hypotheses of direct links between the values of specific biological features and particular attributes of behavior, generating testable physiological and behavioral predictions.