The hippocampus appears to be indispensable in the process of anterograde memory processing, particularly the CA1 region of the formation. Although it does not perform all processing of information alone, it has been found to be tightly connected with people's ability to encode and recall information. Damages to various parts of the CA1 region have been shown to affect people's ability to create new memories, particularly episodic memories (Vargha-Khadem, 1997).
Being that the hippocampus receives information from the sensory association cortex and motor association cortex the hippocampus is able to recognize a physical, emotional, and relational context to every event about which it is asked to encode.
O'Keefe and collaborators (1971) report one often cited finding regarding the hippocampal formation. Upon measuring individual pyramidal cell function in a live, moving animal, it was observed that certain cells would fire at higher rates when the animal was in a specific location. Other neurons, at the same rate, responded to the subject's relocation. These 'place cells', as they came to be called for evident reasons, depended mostly on the animal's visual stimuli, but were also dependent on the rat's ability to maintain a mental map of the environment (Hill, 1981). That is, the place cell firing mainly reflects the animal's perception of its location.