Groups differ in many respects, such as size, duration, and organization. Major types of groups include formal and informal groups, and ingroup and outgroup.

Formal and informal groups differ in the degree to which their functions are stated explicitly and formally. The formation of formal groups is based on some specific rules or laws, and members have definite roles. There are a set of norms which help in establishing order, such as a university or an office organisation. On the other hand, the formation of informal groups is not based on rules or laws, and there is a close relationship among members.

Individuals also compare the group they belong to with groups of which they are not a member. The term ‘ingroup’ refers to one’s own group, and ‘outgroup’ refers to another group.

For ingroup members, we use the word ‘we’, while for outgroup members, the word ‘they’ is used. Persons in the ingroup are generally supposed to be similar, are viewed favourably, and have desirable traits. Members of the outgroup are viewed differently and are often perceived negatively in comparison to the ingroup members. Perceptions of ingroup and outgroup affect our social lives.