The Kruger-Dunning effect is a cognitive bias where individuals with low ability in a specific area overestimate their competence. This phenomenon occurs because they lack the skills to recognize their own deficiencies, leading to inflated self-assessments. Conversely, those with higher competence often underestimate their abilities, assuming that tasks that are easy for them are also easy for others. This effect highlights the importance of self-awareness and the challenges people face in accurately evaluating their own skills and knowledge.