Narrative behavior theory asks an individual to process thoughts, feelings, details, experiences through narrative in an effort to detach from those experiences and reflect on them in an impersonal way. An example would be cognitive behavioral therapy, where a therapist asks a client to re-frame a narrative about unwanted behavior. The client may be focused on himself as a passive player in the situation, e.g. "I don't know what makes me drink." The therapist asks the client to narrate the events that led him to drink, so he can recognize the triggers, e.g. "I turned on the news. I saw the car accident. I remembered my injuries. I poured myself a drink."

In literature, the narrator is retelling events to an audience. One of the primary qualities of modernist literature is a focus on self-reflection and analysis of that reflection. In this way, the narrator is partaking in a form of self-analysis. One example is Nick in The Great Gatsby, who frames the story as a memory of something he experienced and needs to process. Another example is Quentin Compson in The Sound and the Fury, whose narrative is fragmented as he tries to piece together some meaning in what he has experienced.

Another aspect of narrative behavior theory is the question of reliable versus unreliable narration. In a therapeutic situation, as in a literary work, the audience must look for clues as to the narrator's veracity. Some narrators are so convincing, it isn't possible to determine what's true unless they disclose that they have been lying. An example of this tactic would be Briony Tallis in Atonement, who presents one narrative as true, but then confesses that narrative was a fiction she constructed to comfort herself. Another example is Patrick Bateman in American Psycho, who provides a questionable narrative and never discloses which parts are true and which parts are false.