Broadly speaking, my research investigates accuracy and bias in interpersonal perception. I am interested in how biased perceptions of the self and others impact organizationally relevant phenomena including power, interpersonal relations, and decision-making. In particular, I have explored interpersonal perception through three lines of research: the effect of overconfidence on power and status, the effect of overconfidence on decision making, and biases in the perceptions of powerful individuals. Overall, my research provides insight into how behavior in organizations is shaped by biased perceptions of the self and others. Dissertation: How Power is Lost: Illusions of Alliance Among the Powerful My dissertation investigates how power is lost. Although much is known about how power and influence are acquired, little research has investigated the mechanisms underlying power loss. My dissertation examines the impact of biases in interpersonal perception on power loss, and in particular, investigates the impact of illusions of alliance, which I define as the overestimation of the strength of one’s alliances with others. Building substantially from Social Exchange Theory, I argue that powerholders who hold illusions of alliance fail to effectively engage in social exchange, and therefore lose power. In a series of studies, I find that powerholders who hold illusions of alliance lose power, and that this occurs, in part, because illusions of alliance lead to the degradation of alliances and social exchange relationships. I also find that power itself tends to increase the propensity to hold illusions of alliance. My dissertation therefore addresses one cause of instability in power hierarchies; although power provides numerous advantages, it also leads to systematic biases, including illusions of alliance, which can lead to the loss of power. This research contributes to theory on power by investigating the mechanisms underlying power loss, and also provides practical implications for understanding how people in positions of power may lose their power by forming biased assessments of their alliances.