There are several reasons why we don’t know ourselves as well as we think we do. Here are just four:
The Actor-Observer Bias.
This very fundamental bias in perception states that when we try to explain why we do things (we are the “actor”), we tend to over-ascribe cause to situational factors. So, for example, when we fail at something, we tend toward situational explanations—"The sun was in my eyes," "It was peer pressure," etc. Those watching us, on the other hand, are biased toward making dispositional attributions for our actions—"She is awkward,” “He is immoral," etc. As a result, we tend to blame the situation, while others blame us.
How to get better self-insight: Realize that both the situation and ourselves are responsible for our actions and outcomes—and that others’ perception is biased toward blaming us.
Self-Protective Biases & Rationalization.
It is a very human tendency to believe that we are better, stronger, or smarter than others. After all, 90 percent of people believe that they are “above average” in intelligence and communication skills. When we fail, then, we protect our self-esteem by rationalizing and making excuses. But in doing so, we also fail to gain the self-insight that would allow us to improve.
How to get better self-insight: This is tough for many people, but it involves being honest and candid with ourselves. It takes courage to own up to mistakes, but in the long run we become better, stronger people. This sort of courage and honesty is what builds character.
Lack of perspective.
It is important to solicit others’ honest opinions, and to verify their opinions, in order to gain better self-understanding. Seeing ourselves as others see us is good feedback for understanding how our behavioral patterns affect others. For example, organizations often rely on "360-degree" feedback to improve an individual’s performance and to develop leadership. This involves getting evaluations from those around you—superiors, subordinates, peers. This helps in understanding how others see us. For example, if co-workers say you are “aloof” it may be your shyness or introversion, and this feedback about how others interpret your actions can help you gain self-insight.
Magical thinking is when we make associations between one event—for example, some behavior we performed—and an unrelated outcome. Some examples are superstitious behaviors or belief in magic, ESP, or some supernatural force. The problem with magical thinking is that we can believe that our actions are caused by the magical force instead of being due to us, or the social environment. Reliance on magical thinking to explain things leads to self-deception and a lack of self-insight.