It can lead you to compress the members of a category, treating them as if they were more alike than they are; amplify differences between members of different categories; discriminate, favoring certain categories over others; and fossilize, treating the categorical structure you've imposed as if it were static.
Categorization is the act of sorting and organizing things according to group, class, or, as you might expect, category. This noun is very similar in meaning to "assortment," "classification," and "compartmentalization."
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