This article presents a rational model developed under the distributed cognition framework that explains how social tags influence knowledge acquisition and adaptation in exploratory ill-defined information tasks. The model provides integrated predictions on the interactions among link selections, use and creation of tags, and the formation of mental categories. The model shows that the quality of tags not only influences search efficiency, but also the quality of mental categories formed during exploratory search. In addition, the model shows that aggregate regularities can be explained by microstructures of behavior that emerged from the adaptive assimilation of concepts and categories of multiple users through the social tagging system. The model has important implications on how collaborative systems could influence higher-level cognitive activities.