With internalization, one solidifies his or her own beliefs and values in terms of morality as opposed to those of society's as a whole. This may involve self hypnosis or the analyzing a situation in a way that allows the person to feel they are correct in doing so. Internization is the opposite of externalization.
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When you take something and develop it inside yourself. Its psychological not physical. You could internalize your mother fear of snakes. Meaning now you fear snakes. Get it?