Critical Thinking, Human Factors:

People tend to hold overly favorable views of their abilities in many social and intellectual domains. The authors suggest that this overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.

...we argue that the skills that engender competence in a particular domain are often the very same skills necessary to evaluate competence in that domain–one's own or anyone else's. Because of this, incompetent individuals lack what cognitive psychologists variously term metacognition, metamemory, metacomprehension, or self-monitoring skills. These terms refer to the ability to know how well one is performing, when one is likely to be accurate in judgment, and when one is likely to be in error.

...Because people usually choose what they think is the most reasonable and optimal option, the failure to recognize that one has performed poorly will instead leave one to assume that one has performed well. As a result, the incompetent will tend to grossly overestimate their skills and abilities.

...One puzzling aspect of our results is how the incompetent fail, through life experience, to learn that they are unskilled. ... Although our analysis suggests that incompetent individuals are unable to spot their poor performances themselves, one would have thought negative feedback would have been inevitable at some point in their academic career. So why had they not learned?

One reason is that people seldom receive negative feedback about their skills and abilities from others in everyday life. Even young children are familiar with the notion that "if you do not have something nice to say, don't say anything at all." Second ... some tasks and settings preclude people from receiving self-correcting information that would reveal the suboptimal nature of their decisions. Third, even if people receive negative feedback, they still must come to an accurate understanding of why that failure has occurred. The problem with failure is that it is subject to more attributional ambiguity than success. For success to occur, many things must go right: The person must be skilled, apply effort, and perhaps be a bit lucky. For failure to occur, the lack of any one of these components is sufficient. Because of this, even if people receive feedback that points to a lack of skill, they may attribute it to some other factor.

Finally, Study 3 showed that incompetent individuals may be unable to take full advantage of one particular kind of feedback: social comparison. One of the ways people gain insight into their own competence is by watching the behavior of others. In a perfect world, everyone could see the judgments and decisions that other people reach, accurately assess how competent those decisions are, and then revise their view of their own competence by comparison. However, Study 3 showed that incompetent individuals are unable to take full advantage of such opportunities. Compared with their more expert peers, they were less able to spot competence when they saw it, and as a consequence, were less able to learn that their ability estimates were incorrect.

...in order for the incompetent to overestimate themselves, they must satisfy a minimal threshold of knowledge, theory, or experience that suggests to themselves that they can generate correct answers. In some domains, there are clear and unavoidable reality constraints that prohibits this notion.