The Disenchanted article You Can't Blow Up the Earth mentions this study on self-evaluation by the incompetent:
...relatively "incompetent" participants, which we defined as those whose test score fell in the bottom quartile... grossly overestimated their ability relative to their peers. Whereas their actual performance fell in the 12th percentile, they put themselves in the 58th percentile. These estimates were not only higher than the ranking they actually achieved... but were also marginally higher than a ranking of "average" (i.e., the 50th percentile).... That is, even participants in the bottom quarter of the distribution tended to feel that they were better than average.
It reminded me of Joel-on-Software's piece, Incentive Pay Considered Harmful:
So if everybody thinks they do good work, and the reviews are merely correct (which is not very easy to achieve), then most people will be disappointed by their reviews. The cost of this in morale is hard to understate. On teams where performance reviews are done honestly, they tend to result in a week or so of depressed morale, moping, and some resignations. They tend to drive wedges between team members, often because the poorly-rated are jealous of the highly-rated, in a process that DeMarco and Lister [authors of the classic Peopleware I still haven't read] callteamicide : the inadvertent destruction of jelled teams.
And of course there's always the classic aphorism that relates exactly this idea:
To know is to know that you know nothing. That is the meaning of true knowledge. -- Confucius
