Historically, research on political polarization has focused on the divergence of attitudes through reasoning, deliberation, or biased information processing. But, despite a general perception that polarization is increasing, the divergence of attitudes at the macro and the micro-level finds only weak empirical support, at best. Instead, political polarization manifests as belief consolidation, social segregation, and affective polarization—a growing difference between in-group love and out-group hate for groups of different political color. In this talk, I present two studies on the consequences of affective polarization and the role of political identity on attitude formation and collective decision-making. One study investigates how discussions on social media platforms affect attitude formation in the presence of selective exposure (i.e., ‘echo chambers’) and identity cues. The second study addresses whether identity cues affect group-level success when trying to coordinate on a mutually beneficial outcome. Taken together, they highlight the importance of social identity processes in politics.