Her book Respect, Plurality, and Prejudice combined critical theory with psychoanalysis and psychosocial studies, examining the underlying unconscious forces and structures that make up the phenomena of xenophobia, Antisemitism, Islamophobia, homophobia and sexism. It provides an overview of how social prejudices, and the discrimination and violence that often tend to accompany the latter, come into being. Moreover, It argues that in order to fully understand how a complex phenomenon such as prejudice works, we need to alter our traditional Western philosophical understanding of the subject as a supposedly fully rational, autonomous and individual agent. Auestad argues that we need a more situated and relational understanding of subjectivity and the subject, as prejudice and acts of discrimination always take place in a contextualized setting between subjects whose thoughts and actions influence each other.
Auestad suggested that psychoanalysis can be used to think about the invisible and subtle processes of power over symbolic representation, for example, in the context of stereotyping and dehumanization, and posed the question of what forces govern the states of affairs that determine who is an 'I' and who is an 'it' in the public sphere.
She founded and runs the international and interdisciplinary conference series Psychoanalysis and Politics http://www.psa-pol.org , which aims to address how contemporary political issues may be analyzed through psychoanalytic theory and vice versa – how political phenomena may reflect back on psychoanalytic thinking.