Who are you?
What makes you tick?
How do you know when you are doing the right thing?
The answers to all of these questions are based on the identities that you store within you. You use identities constantly. Let's look at a quick example to help get on the same page...
Imagine that a salesperson arrives at a restaurant to speak with a local business owner. Who do you think will pay the bill? Can you imagine what the two people in our story are wearing? Do you have any preconceived notions on what they will say or how they will act toward each other?
If you are like most other people, you probably think the salesperson is there to make a sale. They will probably pay for the meal and are wearing appropriate business attire, or maybe a collared shirt with their company logo on it. They may have an attache case or something else to contain their latest products and price sheets. The business owner is probably similarly dressed, but the conversation coming from her is more guarded. I mean, after all, she still needs to protect her business and ensure that whatever is purchased meets the business' needs and at the right cost.
Now, let me change the scenario. Imagine a salesperson arrives at a restaurant to speak with a local business owner. The salesperson plays tennis with the business owner every other weekend. Have your answers to the questions I asked above changed? Probably they have because you are now able to make judgments based on the identities you assigned to the two characters in our story. The identities of "salesperson" and "business owner" provide different behaviors than the identities of "friends" or "tennis players."
This is the power of using social identity to understand our own behaviors and that of others.