With the advent of faster computers, the notion of doing machine translation from a huge stored database of translation examples is no longer unreasonable. This paper describes an attempt to merge the Example-Based Machine Translation (EBMT) approach with psycholinguistic principles. A new formalism for context- free grammars, called *marker-normal form*, is demonstrated and used to describe language data in a way compatible with psycholinguistic theories. By embedding this formalism in a standard multivariate optimization framework, a system can be built that infers correct transfer functions for a set of bilingual sentence pairs and then uses those functions to translate novel sentences. The validity of this line of reasoning has been tested in the development of a system called METLA-1. This system has been used to infer English->French and English->Urdu transfer functions from small corpora. The results of those experiments are examined, both in engineering terms as well as in more linguistic terms. In general, the results of these experiments were psycho- logically and linguistically well-grounded while still achieving a respectable level of success when compared against a similar prototype using Hidden Markov Models.