*"I'm good at reading people."

"I'm a great judge of character."

When you hear this, or think this about yourself, be careful.

Here's a made-up example: Your cousin Amy is wearing all black. Your sister Jane says that she'd look good in a light-colored shirt, maybe pink, because of her fair skin.

You think that's rude. You also have a theory about this—after all, you've watched your sister for years! You are annoyed enough to express it later. You say to Jane, "You do things like this when we visit Amy because of your competitiveness, which you don't even notice. You think Amy is prettier than you so you pick on her."

And then Jane snaps back, "You're the one who worries all the time about your looks! And you're always worried about what Amy thinks."

You think, I don't worry about my looks as much as she does. Well maybe a little, but I already knew that. Jane just can't see how competitive she is! How can she be so stupid?

Yes, it's possible you are more insightful than your sister. But first, you need to know about an everyday human mistake called the "illusion of asymmetrical insight." In other words, human beings tend to overestimate their own insight and underestimate other people's.

The feeling that they lack insight is part of an overall tendency to assume that other people are wrong when they disagree with us. The official name for that tendency is "naive realism." We think we're "realistic" and they're "biased."

If you're interested in psychology, you especially might assume that you'd catch yourself when you're overconfident. However, cognitive biases are hard to catch. We fall into them automatically, when we're not paying full attention. The key remedy, far easier said than done, is to teach ourselves over time to withhold judgment and leave room for doubt. Assume there's much you don't know.

Maybe Jane and Amy had a phone conversation before your visit. They might have talked about which colors flatter them. Amy might have told Jane that she's trying to fit in with a Goth black-wearing crowd that she feels nervous about. Jane is encouraging her to see other options. She might have all kinds of reasons for her remark that don't stem from competition.

In a study of this problem among college roommates, researchers found, as expected, that students tended to think they had more insight into their roommates than vice versa and also more self-insight. As we've all experienced, the problem infects our politics. The same study found that we overestimate the superior insight of our group, compared to another group. Conservatives think they're smarter about liberals and liberals think they're smarter about conservatives. Pro-choice people think they understand pro-lifers better than vice versa. Pro-lifers ditto. We're smart. They're dumb.

Why might this be? We experience ourselves from the inside. When this research team asked volunteers to describe a time when they felt most like themselves, nearly 80 percent chose an internal experience. When describing how they assessed other people, the volunteers focused on actions. Let's say you're late to a meeting. You know you had an emotionally difficult phone call and needed time to calm down before you left. But when others arrive late, you are more likely to think that they're routinely late because they're disorganized or self-centered. You don't think it could be situational. It's hard to remember to give them the benefit of the doubt.

You see yourself as complicated with underlying motives that might not always be apparent. You see yourself from the inside. Meanwhile, you judge others based on simple rules.

How can you actually use this information?

Be cautious about judging others and thinking you can read their unconscious motives. You might simply lack knowledge about the situation or their reasons. When other people try to read you, and assume they're more insightful, you don't need to listen to them. It's easy to feel misunderstood and resent their interpretations. Try shrugging it off.

In the workplace, you might fall into bias about coworkers or another department or team. After all, you know a good deal about your own work situation and you might be missing key information about theirs.

As psychologist Jonathan Haidt says, our minds “unite us into teams, divide us against other teams, and blind us to the truth.” We come up with ugly names for our enemies or any out-group, thinking that the people who hold those views are all alike—meanwhile, your own group is diverse, just as you are complex. The other side is ignorant and can't see it your way, while you completely understand their point of view. It just happens to be stupid!

A good remedy would be to hold your opinions lightly, ask questions, and test your assumptions. Of course, that's more difficult when you are in conflict. This is one good time to apply the Golden Rule: Do unto others as you would have them do unto you.