In a complex and fragmented world we need to define our identity - a sense of who we are and where we belong. In 1979 British psychologists Henri Tajfel and John Turner introduced the Social Identity Theory, where our 'social identity' within a group shapes our norms, attitudes and behaviour.
The theory suggests that the group we identify with (such as family, football club, nation) is important to our self-esteem and sense of identity. By a process of social categorisation we decide which social group people belong to: 'us' or 'them' (the in-group or out-group). This is followed by social identification where we adopt the identity of a group and adjust our behaviour accordingly; and social comparison where we compare our groups with others.
Enhancing the traits of the in-group ("we're great") and denigrating out-groups ("they're bad") ensure that the social comparison comes out favourably for our own group. According to the social identity theory the in-group will look for negative aspects and characterisations of the out-group to boost their own self-image.
Our innate cognitive tendency to group things together makes us prone to exaggerate the similarities in a group - whether it's positive traits within our own group or negative traits amongst 'the others' – and exaggerate the differences between 'us' and 'them'.