This study examined antecedents (rewards and threats to self-esteem) and consequences (group conflict and performance) of selfand group-enhancing positive illusions. Hypotheses regarding the magnitude of these illusions were derived from attention-based and self-esteem-based explanations for why people engage in positive illusions. The authors tested these hypotheses in a laboratory experiment in which 408 subjects performed a decision-making task both individually and in a group. Results showed that threats to self-esteem affected the magnitude of illusions more than rewards, the two types of illusions differentially affected group conflict and performance, and selfand group-enhancing illusions were positively related. The authors discuss several implications of their results and of simultaneously studying illusions about both oneself and one’s group.