I found an old (1980) paper by Tony Greenwald, Professor of Psychology at the University of Washington, talking about the role of ego in our lives. The parts about egocentricity and self-justification were the most fascinating.
Here are some excerpts with the full paper linked below.
Ego, as an organization of knowledge (a conclusion to be developed later), serves the functions of observing (perceiving) and recording (remembering) personal experience; it can be characterized, therefore, as a personal historian. Many findings from recent research in personality, cognitive, and social psychology demonstrate that ego fabricates and revises history, thereby engaging in practices not ordinarily admired in historians.
The most striking features of the ego are three cognitive biases, which correspond disturbingly to thought control and propaganda devices that are to be defining characteristics of a totalitarian political system. The three biases are: egocentricity (self perceived as more central to events than it is), “beneffectance” (self perceived as selectively responsible for desired, but not undesired, outcomes), and conservatism (resistance to cognitive change).
Egocentricity: Ego as Self-Focused Historian
The past is remembered as if it were a drama in which self was the leading player… “individuals accepted more responsibility for a group product than other participants attributed to them”…
Beneflectance: Ego as Self-Aggrandizing Historian
One of the best established recent findings in social psychology is that people perceive themselves readily as the origin of good effects and reluctantly as the origin of ill effects….When a task is performed collectively by members of a group, individual-ability feedback may not be available. This provides free reign for people to believe that they have contributed more than their equal share toward a group success but less than an equal share toward a failure.
Cognitive Conservatism: Ego as Self-Justifying Historian
Conservatism is the disposition to preserve that which is already established. Cognitive conservatism is therefore the disposition to preserve existing knowledge structures, such as percepts, schemata (categories), and memories (see How Our Brain Filters Information). Confirmation bias in memory search. In a study parallel to their 1973 study, Mischel, Ebbesen, and Zeiss (1976) showed that subjects selectively re- called information that confirmed experimentally established positive or negative self-expectations. Snyder and Uranowitz (1978) found a similar memory selectivity in their subjects' retrieving information about a target person so as to confirm a recently established belief about that person's sexual orientation (heterosexual vs. homosexual).
Source: The totalitarian ego: Fabrication and revision of personal history. American Psychologist, 35, 603-618.