Negotiating Digital Identities with AI Companions: Motivations, Strategies, and Emotional Outcomes

AI companions enable deep emotional relationships by engaging a user's sense of identity, but they also pose risks like unhealthy emotional dependence. Mitigating these risks requires first understanding the underlying process of identity construction and negotiation with AI companions. Focusing on Character.AI (C.AI), a popular AI companion, we conducted an LLM-assisted thematic analysis of 22,374 online discussions on its subreddit. Using Identity Negotiation Theory as an analytical lens, we identified a three-stage process: 1) five user motivations; 2) an identity negotiation process involving three communication expectations and four identity co-construction strategies; and 3) three emotional outcomes. Our findings surface the identity work users perform as both performers and directors to co-construct identities in negotiation with C.AI. This process takes place within a socio-emotional sandbox where users can experiment with social roles and express emotions without non-human partners. Finally, we offer design implications for emotionally supporting users while mitigating the risks.