Black and White Insanity

"Many different values mix together, and the world becomes gray... That is unforgivable! I will separate Pokémon and people, and black and white will be clearly distinct!"

—N, Pokémon Black and White

In Real Life, seeing the world in absolute Black and White Morality is considered normal for small children, but seen as a far less healthy trait in adults. A person who regards the people around him as entirely good or entirely evil, as if they were part of some really simplistic narrative, is very likely to have a mental disorder.

Some authors have picked up on this, playing belief in Black and White Morality as a sign of the character being insane or at least mentally unstable.

While this is almost always done in settings that are not of Black and White Morality themselves, exceptions exist. In such cases, a Lawful Good Anti-Hero suffering from Black and White Insanity can be very disturbing indeed in the eyes of their fellow Lawful Good real heroes.

This trope is not about regarding everyone as either completely sane or completely insane - however, such a worldview would be a good example of this trope.

A Character suffering from Black and White Insanity is likely to reason in False Dichotomies and keep their worldview coherent by applying huge amounts of Insane Troll Logic and meeting criticism with Abomination Accusation Attacks. Black and White Insanity might also be what makes a Well-Intentioned Extremist, well, an extremist. This kind of insanity is pretty much the characteristic of the Knight Templar. Character development might lead to the insane one becoming a Troubled Sympathetic Bigot.

Compare Activist Fundamentalist Antics, Windmill Crusader, With Us or Against Us.

Contrast Black and White Morality (for settings where the world actually operates in a way that makes this kind of world-view completely rational).

No real life examples, please; calling individuals 'insane' is not a compliment. Examples of personality disorders are okay.

Examples of Black and White Insanity include:

Anime and Manga

This tends to come up in Death Note a lot. Light starts to shift into this as the series goes on, and the fourth Kira is this through and through (he essentially had this as a child, but couldn't quite grow out of it).
Sensui from Yu Yu Hakusho. Emphasis on "insanity".
The X-Laws are all this. Especially in the anime.
Martian Successor Nadesico has this in the form of the Jovians.
Sayaka in Puella Magi Madoka Magica.
Flit Asuno winds up with this after Yurin's death in Mobile Suit Gundam AGE.
Shinn's greatest problem is Gundam SEED Destiny is his inability to see or accept shades of grey. He's not exactly insane, but he's certainly highly unstable. By the finale though, he has definitely gone off the deep end, being willing to defend a Kill Sat about to destroy an entire country because he believes that country to be pure evil (that he was until recently a native citizen of said country actually fuels this belief).
In Zetman Kouga idolises Alphas, a Superhero from a cartoon with Black and White Morality, and tries to emulate him even into adulthood. This does not turn out well.

Comic Books

An early version of the Heterodyne Boys (the basis of the characters of the same name in Girl Genius, but specifically not the same guys, according to Studio Foglio) has the titular characters traveling to an alternate universe with Grey and Grey Morality, where they end up killing the first guy they meet in a bar. They then proceed to conclude that he must have been evil, because where they come from, only evil people ever die. In their own universe, that is assumed to be true, but in the universe they ended up in, that combined with their abilities essentially makes them a pair of Omnicidal Maniacs.
Rorschach in Watchmen, meant deliberately as a comment on Steve Ditko's more fanatically Objectivist characters.
Two-Face is sometimes portrayed as having this as the root of his multiple personality disorder.
- This is particularly obvious in his post-Year One characterisations, where the "good" persona believes in fairness and the hope of goodness in people, while the "evil" side sees unfairness and cheating everywhere. To quote his revised origin:

"Harvey": Good boys don't do bad things.
"Two-Face": BAD BOYS DON'T DO GOOD THINGS.

In Logicomix, Ferge is totally honest and devoted to truth & logic. Sadly, this devotion combined with Ignorant of Their Own Ignorance leads to Black and White Insanity in the form of a Straw Vulcan despise for women and jews. On the whole, this make him a Troubled Sympathetic Bigot who is desperately trying to do the right thing.

Film

In Tucker and Dale vs. Evil, Chad keeps insisting in a black and white narrative with himself as the good guy and the hillbillies as the villains. Since said hillbillies are the titular characters, well...
In "Detective Story", the main character views the world this way, even refusing to give a break to a man who embezzled a small amount of money despite the victim not wanting to prosecute. He tells them that he'll commit another crime and another until his like the gibbering idiots they've also arrested. His world collapses when he finds out his saintly wife knew men before him, became pregnant and had an abortion
God Bless America: With his strict morality of right versus wrong, Frank's reality crumbles. He comes across as being less capable of comprehending the world than Roxy, who easily exploit his insecurity to get him to embark on his misguided crusade. While he's a Windmill Crusader, she seem to simply be in it For the Evulz.
- The the television ranter, tea party members and Westboro Baptist Church picketers Frank kills are also portrayed as suffering from this - either genuinely or simply pretending to get attention.

Literature

In Les Misérables, Inspector Javert is a By-The-Book Cop who believes that "criminals are evil, period". He dedicates his life to pursuing the protagonist, eventually realizing his mistake... something that makes him very depressed.
Holden Caulfield from The Catcher in The Rye suffers from this trope, and the consequences are apparent.
Melisandre of Asshai in A Song of Ice and Fire who is convinced that everything she does is all in the name of the greater good. This is probably best exemplified when she speaks to Davos Seaworth:

If half an onion is black with rot, it is a rotten onion. A man is good or he is evil.

In Flatland, the ruling caste enforce a Black and White Morality worldview to the point where they outlaw color, enforcing the world to literally be black and white. Their excuse for this draconic law is that it's needed for preserving the sexual purity of their women.
Galad from The Wheel of Time has a comparatively minor case of this; he's described as "always doing the right thing, no matter who it hurts" and has very strict ideas concerning what right and wrong entail. This leads him eventually to join the Children of the Light, an organization (in)famous for this kind of thinking. As of the more recent books, he seems to be lightening up, at least a little. On the plus side, because he's now influential in the Children, his lightening up is taking the organization with him.

Live-Action TV

Virgilia in the North and South US miniseries is against slavery. Fine. Believing that everyone from the southern USA is Exclusively Evil? Not so fine. And it keeps going downhill from there, with her ruining her own life and arguably becoming more of a liability to her cause rather then an asset.
Buffy the Vampire Slayer: The Watchers Council says all demons are evil. Of course, this is first disproved by the vampire with a soul Angel, and then the soulless vampire Spike, who actually goes and gets a soul for love. Not to mention Clem, a demon so non-evil that not only does Buffy trust him with Dawn, but Dawn is able to push him around (and he comes to Buffy's birthday party).
- But he still eats kittens.
- Not to mention that the Slayers themselves have powers that are demonic in origin.
- Angel showed the Council's position to be nonsense, with scores of non-evil demons appearing. Even many of the demons they fight are "evil" not in a Legions of Hell apocalyptic way, but in a career criminal, thug-for-hire way.

Music

In Bad Religion lyrics, this trope is implied to be one of the main problems with people and society.
In Billy Joel's song "Shades of Grey", while he notes his own departure from Black and White Morality and how much easier it was, he also cautions in the vein of this trope:

And the only people I fear
are those who never have doubts
Save us all from arrogant men,
and all the causes they're for

Tabletop Games

The Oracles from Genius: The Transgression have this as their defining character flaw.
In Magic: The Gathering, this is White's main flaw, which is why Knight Templar's are fairly easy to create. A specific example were the Loxodons from Mirrodin (metal covered anthropomorphic elephants), which were mentally incapable of accepting the concept of moral shades of grey. The white phyrexians that took over Mirrodin were even worse in that regard.
In Warhammer 40,000, pretty much every single sentient being is afflicted by this, due to Fantastic Racism. Except the Exclusively Evil ones.

Video Games

N and Team Plasma from Pokemon Black And White has this. If you're not in support of their insane Cartoonish Supervillainy, then you're a cruel and abusive Lilipup-kicking Pokemon trainer! It turns out that Team Plasma's claim to having this is merely a cover-up for their true motives -- to Take Over the World. N turns to be the true Plasma King. The only one who wants to Take Over the World is Ghetsis.
In Dragon Age II, as Anders becomes more and more obsessed with the Mage/Templar issue of Kirkwall and as he's starting to lose the battle against Vengeance, he becomes more and more hostile to those he perceives as pro-Templar or just generally an enemy of the mages, including those in Hawke's party, and including other mages. At the nadir of his madness, one isn't even allowed to abstain from the debate; choose a side or he'll choose it for you and designate you an enemy.
- Fenris, too, in the other direction, to a slightly lesser extent. Fenris believes that all mages are evil, period. Interestingly, he's actually aware that it's generally a bad idea to overgeneralize the innocent many based on the actions of a guilty few. But reminding him of that will cause him to rationalize that bad magic is so tempting that all innocent mages, with the possible exception of Mage!Hawke, will eventually become guilty. The "lesser extent" part comes in because Fenris never quite acts on his belief that all mages are the same beyond insulting the mages in the party, and Fenris will sometimes apologize for being rude if it's pointed out to him, where Anders...well, play the end of the game for details.
Ishida Mitsunari in Sengoku Basara. Either you are a fellow servant of Hideyoshi, in which case he will (grudgingly) tolerate you, or you are a vile sinner who will be killed in the most gruesome fashion imaginable. It doesn't help that he's quite a Horrible Judge of Character.
Heavily implied with the apparent Big Good Rohoph in the MARDEK series, due to the Violet Crystal's influence. Qualna calls him out on it and gets a Fate Worse Than Death for his trouble.

Web Comics

Miko in The Order of the Stick is built on this trope, growing increasingly delusional over the course of the story arc. As her insanity increases, it changes her from a mere Knight Templar into a total Windmill Crusader - handwaving even the fact that the Gods have stripped her of her paladin powers.
NARC: Max Force has become this in Captain SNES, wherein he labels people who disagree with him about just about anything as "druggies" and attempts to shoot them down. Once he is convinced someone is a druggie, no force in the world can convince him otherwise. And when he fails to shoot his target, he comes up with insane excuses as to why he didn't actually miss; he was just aiming at something else.
The partisan climate of the US devolving into this on both sides was the driving force behind the less-than-stellar state of affairs in Remus
Kore in Goblins is an incredibly cruel dwarf paladin who sees evil as a disease and wants to eradicate it by brutally killing everyone he deems evil, including all members of "monstrous" races, anyone who had any contact with said monsters and didn't kill them on the spot (including abducted innocents and children) and anyone who dares to oppose him or question his actions. He is cursed to trap his victims' souls in his body but also uses it to his advantage by benefitting from any alignment he sees fit, keeping his paladin powers despite acting nothing like a paladin.

Western Animation

Near the end of Avatar: The Last Airbender, especially in the finale, Azula begins to adopt this mindset, seeing everyone as being either completely for her or a complete traitor to her. Most notably, the end of the two-part episode "The Boiling Rock" after Mai and Ty Lee turn on her.
- Parodied when she banishes one of her twin handmaidens, convinced one is loyal and the other is treacherous, despite the fact that she can't tell them apart.
Danny Phantom's first episode has Sam and Tucker on the opposing sides of a Meat vs. Veggies, and put Danny in the middle:

Sam: you're either with me...
Tuck: ...or you're against her!
Both: SO WHOSE SIDE ARE YOU ON?!

Other Media

Tuyet from Bionicle. She's a Lawful Evil character, who wants to take over the Matoran universe because she genuinely believes she could make it a better place. However, an Alternate Universe shows that this would mean brainwashing all the other Toa into Knight Templars, and killing anyone who poses a potential threat to her position as Empress.

Real Life

This is a trait of several real life personality disorders, such as Borderline Personality Disorder, Obsessive-Compulsive Personality Disorder, and some forms of Narcissism.
Fanatical adherents of all political philosophies and religious faiths, even without having any clinical mental disorders to fuel it. It's not about what you believe, it's about how you believe in it. Of course, some ideologies and faiths are more prone to this than others; however, this is not the place for that debate.