Ayn Rand draws an analogy between valid concepts and "file folders." The conceptual hierarchy organizes our knowledge of reality into a highly efficient filing system—often with folders within folders, and so on. The mind, like an office, cannot process information efficiently if items are not rationally organized into their "folders."

Unfortunately, the approach to concept formation used by many people is haphazard and illogical, particularly as they reach higher, more abstract levels. Such people are highly influenced by subjective feelings during this process, grouping units under a particular category because they vaguely "seem" to belong together. This process can be termed "conceptual gerrymandering." Just as political gerrymandering leads to elections that reflect the biases of the legislature or other redistricting authority (), a subjective approach to concepts, in which conceptual boundaries are decided whimsically, likewise leads to thinking that only reflects one's emotional prejudices. Later we shall analyze how this kind of intuitive approach tends to cause one's thought processes to become disconnected from reality.

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