Identity formation, also known as individuation, is the development of the distinct personality of an individual regarded as a persisting entity (known as personal continuity) in a particular stage of life in which individual characteristics are possessed and by which a person is recognized or known (such as the establishment of a reputation). This process defines individuals to others and themselves. Pieces of the person's actual identity include a sense of continuity, a sense of uniqueness from others, and a sense of affiliation. Identity formation leads to a number of issues of personal identity and an identity where the individual has some sort of comprehension of themselves as a discrete and separate entity. This may be through individuation whereby the undifferentiated individual tends to become unique, or undergoes stages through which differentiated facets of a person's life tend toward becoming a more indivisible whole.
Identity is often described as finite and consisting of separate and distinct parts (family, cultural, personal, professional, etc.), yet according to Parker J. Palmer, it is an ever evolving core within where our genetics (biology), culture, loved ones, those we cared for, people who have harmed us and people we have harmed, the deeds done (good and ill) to self and others, experiences lived, and choices made come together to form who we are at this moment.
Many theories of development have aspects of identity formation included in them. Two theories stand out in regards to this topic: Erik Erikson's theory of psychosocial development (specifically the "identity versus role confusion" stage of his theory) and James Marcia's identity status theory.
Erikson's belief is that throughout each person's lifetime, they experience different crises or conflicts. Each of the conflicts arises at a certain point in life and must be successfully resolved for progression to the next of the eight stages. The particular stage relevant to identity formation takes place during adolescence, called "Identity versus Role Confusion."