The document explains the formation and effects of stereotypes, highlighting how they can be developed through cultural influences and personal experiences, often leading to cognitive biases like illusory correlations and confirmation bias. Key studies by Hamilton and Gifford demonstrate how minority groups may be negatively stereotyped due to their lesser representation, while stereotype threat can adversely affect performance and reinforce these stereotypes. Additionally, the document discusses issues of memory distortion associated with stereotypes and the potential harms of both positive and negative stereotypes.