The cognitive processes by which people understand and make sense of others and themselves, is called social cognition.
Social Cognition is the manner in which we interpret, analyze, remember, and use information about the social world.
Social cognition is a combination of cognitive psychology and social psychology which emerged in the 1960s. Seen as part of the cognitive revolution but with much older roots in Gestalt psychology. Principally concerned with our information processing and how we use it with the minimum expenditure of cognitive effort to make sense of our social environment and our social behavior. This includes our attribution of social behavior and causality, the way we stereotype people and our use of heuristics.