The correct answer is characterization.
Characterization refers to the method where an author creates his or her characters, by giving them particular qualities and flaws. These characters may or may not change and develop throughout that piece of literature, depending on whether they are dynamic or static characters.
Perception refers to how other characters/readers view someone; social impact is the effect that a work of literature may have on the society; physical setting is the setting where the story unfolds.
