Links - Forer effect (wiki) & "Why It's Hard to Admit to Being Wrong" NPR transcript.

http://skepticwiki.org/index.php/Forer_Effect

The Forer Effect, named after the psychologist and discoverer B. R. Forer, refers to the tendency of people to believe that a vague and general description applies specifically to them. It has been suggested that much of the apparent effectiveness (and popularity) of pseudoscience personality metrics such as astrology [grasshopper smiles to self :-) ]
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The most common explanation for the Forer effect is a combination of wishful thinking and the mental equivalent of pareidolia, the tendency to see patterns in things.

In particular, humans tend to see vague statements as true, by self-deception : remembering cases and circumstances where they were true and forgetting other circumstances.

http://www.npr.org/templates/story/story.php?storyId=12125926

The engine that drives self-justification, the energy that produces the need to justify our actions and decisions — especially the wrong ones — is an unpleasant feeling that Festinger called "cognitive dissonance."

Cognitive dissonance is a state of tension that occurs whenever a person holds two cognitions (ideas, attitudes, beliefs, opinions) that are psychologically inconsistent, such as "Smoking is a dumb thing to do because it could kill me" and "I smoke two packs a day."

Dissonance produces mental discomfort, ranging from minor pangs to deep anguish; people don't rest easy until they find a way to reduce it. In this example, the most direct way for a smoker to reduce dissonance is by quitting. But if she has tried to quit and failed, now she must reduce dissonance by convincing herself that smoking isn't really so harmful, or that smoking is worth the risk because it helps her relax or prevents her from gaining weight (and after all, obesity is a health risk, too), and so on. Most smokers manage to reduce dissonance in many such ingenious, if self-deluding, ways.

Dissonance is disquieting because to hold two ideas that contradict each other is to flirt with absurdity and, as Albert Camus observed, we humans are creatures who spend our lives trying to convince ourselves that our existence is not absurd. At the heart of it, Festinger's theory is about how people strive to make sense out of contradictory ideas and lead lives that are, at least in their own minds, consistent and meaningful.