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To thrive, any individual, organization, or society needs to separate true from false expertise. This chapter provides a selective review of research examining self and social judgments of human capital – that is, expertise, knowledge, and skill. In particular, it focuses on the problem of the “flawed evaluator”: most people judging expertise often have flawed expertise themselves, and thus their assessments of self and others are imperfect in profound and systematic ways.

The review focuses mostly on empirical work specifically building on the “Dunning–Kruger effect” in self-perceptions of expertise (Kruger & Dunning, 1999). This selective review, thus, focuses on patterns of error in such judgments.

Because judges of expertise have flawed expertise themselves, they fail to recognize incompetence in themselves. Because of their flaws, most people also fail to recognize genius in other people and superior ideas.

The review suggests that organizations have trouble recognizing those exhibiting the highest levels of expertise in their midst. People in organizations also fail to identify the best advice and correct flawed ideas. Organizations may also rely on the “wisdom of crowds” strategy in situations in which that strategy actually misleads because too few people identify the best idea available.

Trust involves making oneself vulnerable to another person with the prospect of receiving some benefit in return. Contemporary theoretical accounts of trust among strangers emphasize its instrumental nature. People are assumed to trust to the extent that they can tolerate the risk and are sufficiently optimistic that their trust will be reciprocated. We describe evidence from laboratory economic games showing that this account empirically fails. Participants often trust even though their risk tolerance and social expectations suggest they should not. We propose, instead, that trust is largely an expressive act. People trust because of dynamics that surround the act itself rather than its potential outcomes. Evidence for the expressive nature of trust comes in two forms. First, studies of the emotions surrounding trust indicate that it is significantly predicted by how people feel about the act itself, not how they feel about its potential outcomes. Second, trust rates rise significantly if people are placed in a relationship with another person, no matter how anonymous, fleeting, or minimal that relationship is – presumably because being placed in a relationship evokes social norms that promote trust. We end our discussion by explaining a curious fact that participants grossly underestimate the trustworthiness of others. We also discuss possible motives for reciprocating trust and questions for future research.

Purpose – Are members of socially dominant groups aware of the privileges they enjoy? We address this question by applying the notion of hypocognition to social privilege. Hypocognition is defined as lacking a rich cognitive or linguistic representation (i.e., a schema) of a concept in question. By social privilege, we refer to advantages that members of dominant social groups enjoy because of their group membership. We argue that such group members are hypocognitive of the privilege they enjoy. They have little cognitive representation of it. As a consequence, their social advantage is invisible to them.

Approach – We provide a narrative review of recent empirical work demonstrating and explaining this lack of expertise and knowledge in socially dominant groups (e.g., White People, men) about discrimination and disadvantage encountered by other groups (e.g., Black People, Asian Americans, women), relative what members of those other groups know.

Findings – This lack of expertise or knowledge is revealed by classic cognitive psychological measures. Relative to members of other groups, social dominant group members generate fewer examples of discrimination that other groups confront, remember fewer instances after being presented a list of them, and are slower to respond when classifying whether these examples are discriminatory.

Social Implications – These classic measures of cognitive expertise about social privilege predict social attitude differences between social groups, specifically whether people perceive the existence of social privilege as well as believe discrimination still exists in contemporary society. Hypocognition of social privilege also carries implications for informal interventions (e.g., acting “colorblind”) that are popularly discussed.

Social exchange theories posit that people engage in diverse forms of exchange to enhance their own interests. Knowing whom to exchange with and what to exchange, however, requires an understanding of other people's wants and needs. Gaining such an understanding requires skill at perspective taking: assessing what other people's preferences are and how they differ from one's own. We discuss a systematic bias in interpersonal perspective taking that can limit people's ability to reap the benefits of social and economic exchange. People systematically overestimate the similarity between their own perspective and that of other people who are in different psychological situations from their own. We show that such “egocentric empathy gaps” occur in transactions between buyers and sellers. Owners are subject to the endowment effect, valuing their possessions more simply because they own them. Non-owners fail to appreciate the psychological impact of endowment and thus make imperfect choices when interacting with owners. We describe how difficult it is for people to learn about the psychology of endowment and explain how misunderstanding that psychology can lead to enmity and perceptions of unfairness. We discuss the broader relevance of egocentric empathy gaps for social policy and pluralistic ignorance.