Social information processing is a way of thinking about how people interact with other people. It's like a game. We observe each other, process what we see and hear, and then decide how to react. It's all based on the idea that we're constantly trying to make sense of our environment, and figure out ways to act that benefit us or the people around us. For example, I might observe someone smiling and think that this person is happy. I might then decide to smile back, because I've noticed that this person's good mood can make my mood better too. Social information processing is the way we use what we observe to decide how to respond.