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The Dunning-Kruger effect is a cognitive bias where individuals with limited competence in a specific domain overestimate their abilities. Described by psychologists Justin Kruger and David Dunning in 1999, it highlights how people who are unskilled tend to lack awareness of their deficiencies, leading them to perceive themselves as more capable than they truly are.

Conversely, highly skilled individuals may underestimate their abilities. This effect is typically assessed by comparing self-assessment with actual performance. For example, participants may take a quiz, then guess their performance levels, which are then compared to their actual scores. The original research covered areas like logical reasoning, grammar, and social skills, but subsequent studies have also looked at various fields, such as business, medicine, and driving.

There are different explanations for the Dunning-Kruger effect. The metacognitive explanation suggests that low performers misjudge their abilities due to an inability to recognize the quality of their performance compared to others. In contrast, the statistical model views it as a statistical phenomenon combined with the general belief that one is better than average. Additionally, some argue that overly positive prior beliefs about one's skills lead to inaccurate self-assessments.

The implications of this effect are significant, as inaccurate self-awareness may result in poor decisions, choosing unsuitable careers, or engaging in risky behaviors, hindering personal growth. However, there's ongoing debate about the robustness of the effect and its practical consequences.