  We describe a framework for inducing probabilistic grammars from corpora of
positive samples. First, samples are {\em incorporated} by adding ad-hoc rules
to a working grammar; subsequently, elements of the model (such as states or
nonterminals) are {\em merged} to achieve generalization and a more compact
representation. The choice of what to merge and when to stop is governed by the
Bayesian posterior probability of the grammar given the data, which formalizes
a trade-off between a close fit to the data and a default preference for
simpler models (`Occam's Razor'). The general scheme is illustrated using three
types of probabilistic grammars: Hidden Markov models, class-based $n$-grams,
and stochastic context-free grammars.
